Cenvat credit availability on desktop used in factory

[Asked by Guest]

Dear Sir, Please advise whether we can avail cenvat credit on desktop used in the factory of the manufacturer. If yes request you yo quote the rule under which we can avail the same. Thanks and regards. Sandesh Shinde.

[Rajagopalan Ranganathan]

Sir,

If the desktop is used in connection with manufacturing activity then credit can be availed. If the same is used for Administrative work then credit will not be available. However it can be argued that since it is used within the factory premises credit is eligible. You can take the credit subject to the risk of audit objections and litigation.

[KASTURI SETHI]

Credit is admissible without any risk.

[Himansu Sekhar]

Credit is available even used in the office. There is no bar now after the amendments in rule 2(a) . even board has clarified that credit on tables and chairs is available.

[Rajagopalan Ranganathan]

Sir,

Rule 2 (k) of Cenvat Credit Rules, 2004 defines 'input' means all goods used in the factory by the manufacturer of the final product. Therefore cenvat duty paid on desktop used in the factory can be taken as credit for whatever purpose the same is used. I withdrew my previous reply.

[Nash Industries I Pvt Ltd]

Credit allowed as it is used directly and / or indirectly in the manufacture of excisable goods.

Regards

S.Ramaswamy

[DR.MARIAPPAN GOVINDARAJAN]

Credit can be taken.

[YAGAY and SUN]

Vide Notification No. No. 13/2016- Central Excise (N.T.) New Delhi, the 1st March, 2016. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 2,-

(a) in clause (a), in sub-clause (A), -

(ii) in condition (1), the words, ―but does not include any equipment or appliance used in an office‖ shall be omitted;

The words ‘Equipment and Appliance’ have not been defined in CENVAT credit Rules, 2004 as amended from time to time. Dictionary meaning of these words can be used for interpretation. However, through the very nomenclature it can be derived that following goods may fall in the ambit of the words ‘Equipment and Appliances’, namely:

1. Air Conditioners
2. Air Coolers
3. Fax Machine
4. Computers including servers etc.
5. Printers
6. Fire Fighting equipment and sensors
7. Any other goods which are being used as Equipment and Appliance in the office of a factory premises, directly or indirectly, in or in relation to the manufacturing of Finished Goods.

It is pertinent to mention here that in the matter of M/s Balkrishna Industries Ltd. versus Commissioner of Central Excise, Jaipur-I,2016 (1) TMI 383 - CESTAT NEW DELHI, it was held that as per the Board's Circular No.943/4/2011-CX dated 29.04.2011, it is mentioned that "goods such as furniture and stationery used in an office within the factory are goods used in the factory and are used in relation to the manufacturing, business and hence, the credit on the same is to be allowed". Therefore, credit on duty paid on air conditioners installed in office of the factory is admissible.

[Ganeshan Kalyani]

Computer falls under office equipment which is an eligible input.

AI Summary

Cenvat credit for office equipment permitted when used in factory; eligibility depends on connection with manufacture.
Cenvat credit on desktop computers used within a manufacturer's factory is available when the computer is used in connection with the manufacture of excisable goods; goods used in the factory by the manufacturer qualify as inputs, and an amendment removing the office-equipment exclusion expands eligibility to include office-type equipment used in the factory in relation to manufacture.