Cenvat credit on water treatment plant

[RAM SHARMA]

Dear Experts,

We are registered manufacturer of exciasable goods. We are purchasing steel tube pipe etc for construction of water treatment plant, fire fitting line and building repair construction etc. within factory premises.

Secondly, we have received imported material through courier bill of entry. In this type of bill of entry have mentioned multiple party and we have received photocopy of this bill of entry.

whether we can take cenvat credit on above mention point.

Thanks

[MANISH SINHA]

Dear Mr. Sharma,

Hope the Water Treatment plant is very necessary for your factory and we can not drain water without treatment. So In my view Credit can be taken on Pipes for Water Treatment plant only. For others deptt may disallow and it is subject to litigation.

Further, You need original BOE for availment of Cenvat Credit. You may get issued master BOE in original in favour to you. Again it is subject to litigation.

Regards,

Manish

[KASTURI SETHI]

Sh.Ram Sharma Ji,

Pl. refer to Sh.Mainsh Sinha's reply dated 25.8.16. My views are as under:-

1. No possibility of litigation in respect of steel tube used in the water treatment plant. Similarly, no chance for litigation in respect of Fir Fighting Line as both are used in the factory as per definition of 'Capital Goods' under Rule 2 (a) of Cenvat Credit Rules, 2004. In my view, 'Repair of building' is also included in the term "Repair of a factory" in Rule 2(l) of Cenvat Credit Rules. See the definition of 'Factory' in legal dictionary. Thus credit is admissible for capital goods and input service.

2. In this situation also if the bill of entry has been addressed to many assessees but a single copy has been prepared by the Customs authorities, the party is not at fault and only one assessee can retain and use original copy of bill of entry. Other assessee should get the copy of bill of entry either certified from Customs authorities or it should be endorsed in the name of assessee who wants to take credit. Then there will be no possibility of litigation.

[RAM SHARMA]

Dear Sir,

Thanks for your valuable reply but i have little bit doubt about building repair construction work because Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer; but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods;

Thanks

[KASTURI SETHI]

Sh.Sharma Ji,

I am talking about input service and not input to be used in the construction of capital goods which is further used in the factory of manufacturer.

[CSSANJAY MALHOTRA]

Dear Friends,

Mr. Manish has rightly stated the admissibility of CENVAT Credit on pipes & tubes used in Water Treatment plant as is covered as Capital Goods. Mr. Kasturi ji has also similar view and I endorse the same.

Building repairs is nothing but part of civil construction work and is not Capital Goods but is Immoveable Property, hence no CENVAT Credit on Input is eligible.

Secondly CENVAT Credit is eligible in case of Bill of Entry is filed in Cargo Mode i.e. individual for each party. When BE is consolidated it looses character of Cargo Mode and becomes Courier Bill of Entry, wherein only original owner can avail CENVAT and not by all. (photocopy is not specified document for CENVAT under CCR 2004)

[KASTURI SETHI]

Sh.CS Sanjay Malhotra Ji,

Thanks a lot, Sir for your endorsement as well as enrichment of my knowledge on the second issue.

[MANISH SINHA]

Thank you Mr. Sanjay Malhotra ji and all for healthy discussion and clarifications.

Regards.

AI Summary

Cenvat credit admissibility on capital goods: water treatment and fire fighting installations qualify; original bill of entry required for import claims. Availability of Cenvat Credit depends on classification of materials and services as inputs, capital goods, or input services. Pipes used in water treatment and fire fighting installations within the factory are regarded as Capital Goods and thus credit eligible, while civil construction and building repair expenses are treated by some as excluded immovable property costs. For imported goods, an original Bill of Entry is required to claim credit; consolidated courier Bills of Entry and photocopies are generally insufficient unless the original is endorsed or a customs certified copy is obtained.