Eligibility of Cenvat Credit when supply of goods to Mega Power Project

[Ramesh M]

Dear Expers,

We are manufacture of Material Handling Equipment like Conveyors, we are planning to supply goods to 2 x 660 MW Suratgarh super critical thermal power station. (It is not International competitive bidding)

I have two issues to clarify from you :

1) Whether we get central excise duty exemption against our supplies ? if yes which notification i need to refer

2) Whether we eligible to avail cenvat credit on our inputs ? if yes what are conditions

[PAWAN KUMAR]

As per my view,

For 1 - Notification No.12/2012-C.E. Dated 17.03.2012 (S.No.338) subject of fulfillment of condition No.43.

For 2 - Yes, Cenvat can be claimed.

[Ramesh M]

Sir,

Still my 2nd issue not cleared, since not no.12/2012 no clarity about cenvat credit. Kindly advice Pleasee ..

[MUKUND THAKKAR]

Whether we eligible to avail cenvat credit on our inputs ? if yes what are conditions

you can availed cenvat credit, but your final product not attract any duty due to exemption, than you have to follow the rules 6 of cenvat credit rules. pay excise duty 6% on exempted value.

[PAWAN KUMAR]

Dear Sir,

If the project for which you are supplying your goods, is in the nature of ICB, You will supply your goods under S.No.336 subject to fulfillment of condition No.41. In such case you need to avail cenvat credit on entire input/input services used in the manufacture and not to reverse the 6% amount at the time of clearance from the factory.

If the project is not under ICB, you are supplying your goods under S.No.338, an certificate called Mega Power Status Certificate is to be submitted before supplying the goods subject to condition No.43. In such cases you need to either maintain separate inventory of inputs/input services and not to claim cenvat. If you are not maintaining separate inventory, avail cenvat credit on entire inputs/input services and reverse 6% amount of value of exempted goods at the time of clearance from the factory.

AI Summary

Cenvat credit entitlement for mega power project supplies hinges on bidding route and compliance with exemption conditions. Entitlement to Cenvat credit for supplies to a mega power project turns on the procurement route and notification conditions: under international competitive bidding suppliers may claim full credit without reversing the notional amount at clearance; for non ICB supplies made subject to a Mega Power Status Certificate either credit is foregone with separate inventory or, if credit is taken, the prescribed reversal under Rule 6 must be effected at clearance.