Capital Goods

[Karuppasamy AM]

Dear Sir,

How can i classified the Materials between Raw Materials & Capital Goods.

Karuppasamy

9894193415

[DR.MARIAPPAN GOVINDARAJAN]

You may under the definition of 'capital goods' and 'inputs' in CENVAT Credit Rules, 2004 which will make it clear which are capital goods and which are raw materials used as inputs.

[YAGAY andSUN]

In addition to the reply submitted by Mr.MARIAPPAN GOVINDARAJAN, you need to check the definition mentioned in VAT Laws, CST Laws, Income Tax Laws, and in Chapter 9 of the FTP as the different definition is provided in different laws and due to their jurisdiction you need to explore further.

[Rajagopalan Ranganathan]

Sir,

As per rule 2 (a) of Cenvat Credit Rules, 2004-

"capital goods" means:-

(A) the following goods, namely:-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under ³heading 6804 and wagons of sub-heading 860692 of the First Schedule to the Excise Tariff Act;

(ii) pollution control equipment;

(iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;

(vi) tubes and pipes and fittings thereof;

(vii) storage tank and

(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis, but including dumpers and tippers

used-

(1) in the factory of the manufacturer of the final products, or

(1A) outside the factory of the manufacturer of the final products for generation of electricity or for pumping of water for captive use within the factory; or

(2) for providing output service;

²³[(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for-

(i) providing an output service of renting of such motor vehicle; or

(ii) transportation of inputs and capital goods used for providing an output service; or

(iii) providing an output service of courier agency

(C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of-

(i) transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii) imparting motor driving skills

(D) components, spares and accessories of motor vehicles which are capital goods for the assesse,

All other materials used in the manufacture of finished goods are inputs. This definition is applicable only for availing credit of Cenvat duty paid on capital goods and inputs under Central Excise Act, 1944 and rules made thereunder.

[Ganeshan Kalyani]

Experts have advised to the point and legally. The main difference and In fact basic difference is that raw material in used in manudacturing process, it undergoes change and becomes finished goods are process is completed. Whereas capital goods helps the process to undertake e.g.. machinery - it processes the raw material into finished goods. Thanks.

[YAGAY andSUN]

Through Capital Goods you can generate the revenue to be used in manufacturing of finished goods whereas input becomes the part of finished goods which brings revenue after selling the same.

[KASTURI SETHI]

Both have separate functions and separate purposes. It is ABC for any person who wants to establish a factory.

AI Summary

Capital goods classification determines CENVAT credit eligibility for equipment versus inputs incorporated into finished goods. Capital goods for CENVAT credit are specified categories of equipment and their components (such as machinery, pollution control equipment, moulds and dies, refractories, tubes, storage tanks, and certain motor vehicles) when used in the factory, for captive generation/pumping or for providing output service; other materials consumed in manufacture are inputs/raw materials. Definitions for other fiscal or regulatory regimes may vary and should be checked separately.