VAT Input Tax credit on ETP

[Ganeshan Kalyani]

Dear Expert,

Kindly help with citation whether VAT Input Tax credit of machinery in Effluent Treatment Plant is eligible for taking set off against VAT output. Also, please clear whether the Input credit on various chemicals, spares are used for ETP machinery, whether ITC is allowed for the same.

Kindly give your valuable comment.

regards,

ganeshan

[YAGAY andSUN]

Dear Ganeshan,

Though following judgment pertains to C.E. but you can use it as reference in VAT matters also to get the relief.

Inputs used in effluent treatment plant are eligible for CENVAT credit : - In Indian Farmers Fertilisers Coop Ltd. v CCE  1996 (7) TMI 141 - SUPREME COURT OF INDIA =86 ELT 177 (SC) =AIR 1996 SC 2542 = 1996 (5) SCC 488 = 15 RLT 498, it has been held that treatment of effluents is an essential and intergral part of the process of manufacture of plant. The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process. Hence, inputs used in the effluent treatment plant will be treated as 'used in the manufacture'. It was also held that inputs used indirectly in the manufacture will also be in the manufacture. It is not essential that ot qualify itself as raw material, it had necessarily and in all cases to go into and be found in the end-product.

Chemicals used in effluent treatment plant is input for CENVAT credit - CCE v Madras Aluminium 2008 (1) TMI 198 - HIGH COURT MADRAS=  (2008) 226 ELT 342 (Mad HC DB).

Regards,

Team YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ganeshan Kalyani]

Dear Sir,

Thanks for you input. I would like to know whether without ETP in a factory, a factory license can be availed as per the Factory Act, 1948.

Kindly validate my understanding.

regards,

ganeshan

AI Summary

VAT Input Tax Credit Eligible for ETP Machinery and Chemicals, Integral to Manufacturing, Says Expert Citing Court Judgment A user inquired about the eligibility of VAT Input Tax credit for machinery and chemicals used in an Effluent Treatment Plant (ETP). An expert responded, referencing a Supreme Court judgment, indicating that inputs used in ETPs are eligible for CENVAT credit as they are integral to the manufacturing process. The expert cited cases supporting that chemicals used in ETPs qualify as inputs for credit. The user then asked if a factory license could be obtained without an ETP according to the Factory Act, 1948, seeking further clarification on this matter.