cenvat credit

[SHARMA NARAYAN]

Dear sir,

Can we take cenvat credit on Reinforcement Steel which is used in for preparion of Stack (Chimni) we can not take credit on cement i am sure about that but what about reinforcement steel & structure steel use for structure and plant and machinery.

[Rajagopalan Ranganathan]

Sir,

Rule 2 (k) of Cenvat Credit Rules, 2004 excludes from the definition of 'inputs' any goods used for -

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods,

except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act.

Services listed under Section 66 E (b) of Finance Act, 1994 are " construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority.

Therefore in my opinion you are not eligible to take credit of duty paid on reinforcement steel & structure steel

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir. But i would like to state that the steel being a integral part of chimney and chimney is essential as per factory act. The chimney is a capital goods and therefore the steel is also to be considered as capital goods and hence credit should be allowed.

In view of the above I would like to appeal that if the amount of credit is substantial then a reference of case law should be taken.

[Ganeshan Kalyani]

Refer, Honble Supreme Courts decision in the case of Commissioner Vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA], where the Apex court allows CENVAT credit on steel items (Plates and M.S. Chennels) keeping in view of the user test.

[DR.MARIAPPAN GOVINDARAJAN]

I agree with the views of Shri Ranganathan

AI Summary

Cenvat credit on structural steel: construction exclusion usually bars credit, but user-test may allow credit where steel forms capital machinery. Rule 2(k) of the Cenvat Credit Rules, 2004 excludes goods used for construction of buildings or civil structures and for laying foundations or making structures for support of capital goods from the definition of 'inputs,' subject to an exception for construction service entries; on that basis reinforcement and structural steel used in erecting a chimney are typically ineligible for Cenvat credit. A contrary view relies on treating the chimney as a capital good and applying a user test-cited authority has allowed credit on steel items when use in manufacture is established.