CENVAT credit on MS racks falling under CHS 73

[Yatin Bhopi]

We are manufacturer. we have recently modified our storage warehouse. We have purchase some rack falling under chapter heading 73 for keeping pallets . MS racks are not fitted in capital goods definition. Since this racks are use for keeping goods in safe and proper movement of goods, can we avail the CENVAT credit in input. Since amount involved is more than 1 Lac we want your expert advice in the matter.

[CA.Ankit Gulgulia]

Racks, shelves, angles and channels generally fall under chapter 73 and 94. These are not capital Goods as per Rule 2(a).

Significance of racks in the manufacturing process / service renderance is key in the present matter.

You may refer

Banco Products (India) Ltd. Vs Commissioner of Central Excise, Vadodara [2009 (2) TMI 101 - CESTAT AHMEDABAD]

HCL TECHNOLOGIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NOIDA 2010 (254) E.L.T. 175 (Tri. - Del.) = 2010 (2) TMI 1001 - CESTAT NEW DELHI

M/s. Sree Ramicides Chemicals Pvt. Ltd. Versus Commissioner of Central Excise (Service Tax), Tiruchirapalli = 2013 (10) TMI 229 - CESTAT CHENNAI

interalia.

[Mahir S]

Cenvat credit on racks may be admissible as inputs, if such racks are actually required for purpose without which the safety and movement of goods is not possible.

AI Summary

Cenvat credit on storage racks depends on whether racks are essential for safe storage and movement of goods in production. Cenvat credit on metal racks hinges on their functional role: although racks, shelves, angles and channels are often classifiable under chapter 73/94 and not treated as capital goods, credit may be admissible if the racks are essential for manufacturing or service operations by enabling safe storage and movement of goods; the decisive criterion is the nexus and indispensability of the racks to the production or service process rather than tariff classification alone.