Capital Goods

[atul gangwar]

Whether Dumper (HEMM) used in coal industry for loading and unloading of coal from collery to dispatch place , are Capital Goods or not? if yes then in which code of excise.

[YAGAY and SUN]

Dear Atul,

 

With effect from 22-06-2010, in respect of the following taxable services specified in Section 65 (105) of the Service Taax Act, dumpers or tippers falling under Chapter 87 of the Central Excise Tariff Act (First Schedule) are treated as Capital Goods provided the said are registered in the name of the output service provider:-

• Site formation and clerance, excavation, earthmoving and demolition services [Section 65 (105) (zza)].
• Mining of mineral, oil or gas service [Section 65 (105) (zzzy)]

Best Regards,

Pradeep Khatri

[Alok Kumar]

Dear Mr. Atul Gangwar,

In terms of the definition  of " capital goods" as provided in the CCR's, 2004 , it appears that the dumpers used in the coal indutry do not qualify as capital goods and accordingly you will not be eligible to claim the CENVAT credit on the said goods.

I personally feel that it should qualify as capital goods considering the fact that it has direct relation with the manufacturing process ( and also the final product is subject to duty of central excise) you are into.

you should make proper representation (through CII/ OTHER trade bodies) to the CBEC / G.O.I for correctting / amending the definition.

Thanks,

Alok Kumar

AI Summary

Capital goods classification: dumpers may be treated as capital goods for specified services when registered to the output service provider.
Treatment of dumpers as capital goods depends on statutory framing: one position treats dumpers registered to the output service provider and used in specified services (site formation, excavation, earthmoving, demolition and mining) as capital goods for capitalisation; another position, applying the excise credit rules definition, finds such dumpers outside the definition and ineligible for CENVAT credit, suggesting industry representation for clarification or amendment.