Allowability of input tax credit on diesel

[S.C. WADHWA]

Dear Sir,

We are manufacturer in food items in Haryana and paying vat tax on the purchase of diesel. Pls advise whether we are ellible to take input tax credit of vat tax paid on the purcchase of diesel which used in generator for the generation of elctricity which used for running the plant. If yes from which date.

Regards,

WADHWA

[Guest]

Dear sir,

As you wanted to know being food produces you can or can’t avail the input credit on diesel oil .

Answer is “No” you can not avail the Input credit on diesel (HSD) or petrol . As per input definition of central excise given below.

input" means all goods, except high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production.

Explanation 1.- The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever.

Explanation 2.- Inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer;

With Regard,

Jai Sinha

[YAGAY andSUN]

Under HVAT Act read with Rules, you may avail the Input Tax Credit on fuels.

[S.C. WADHWA]

 Dear Sir,

 Pls advise from which date input tax credit on fuels can be availed.

 Regards,

WADHWA

 

 

 

[YAGAY andSUN]

Sorry, ITC can't be availed on goods mentioned in entry no. 1 and 2 of the Schedule E under HVAT Act, 2003.

Schedule E
[See sub-section (1) of section 8].
Serial no	Descripition of goods	Circumstance in which input tax shall be nil
1	Petroleum products and natural gas	(i) When used as fuel
		(ii) When exported out of State
2	Capital goods	(i) When intended to be used mainly in the manufacture of exempted goods or in the telecommunications network or mining or the generation and distribution of electric energy or other form of power; or
		(ii) When forming part of gross block on the date of cancellation of the registration certificate.
3	Paddy	(i) When sold in the course of the export of the goods out of the territory of India; or
		(ii) When used in the manufacture of rice which is sold in the course of the export of the goods out of the territory of India.
4	Rice	When sold in the course of the export of the goods out of the territory of India.
5	All goods except those mentioned at Serial Nos. 1 and 2	(i) When used in the telecommunications network, in mining, or in the generation and distribution of electricity or other form of power;
		(ii) When exported out of State or disposed of otherwise than by sale;
		(iii) When used in the manufacture or packing of exempted goods except when such goods are sold in the course of export of goods out of the territory of India;
		(iv) When used in the manufacture or packing of taxable goods which are exported out of State or disposed of otherwise than by sale;
		(v) When left in stock, whether in the form purchased or in manufactured or processed form, on the date of cancellation of the registration certificate.
		(vi) When sold by Canteen Store Department
6	Liquor as defined in the Punjab Excise Act, 1914 (1 of 1914)	When sold in the state by Bar licensees (Licenses L- 4/L-5/L-12C/L-12G/L- 10E).
Note 1 - In this Schedule the expression "on the date of cancellation of the registration certificate" means on the date of effect of the cancellation of the registration certificate.
Note 2 - In respect of entries against Serial Nos.3 and 4, paddy and the rice manufactured therefrom shall be treated as a single commodity for the purposes of sub-section (3) of section 5 of the Central Act..84

AI Summary

Input tax credit on diesel disallowed under fuel exclusion provisions, preventing ITC for diesel used to generate electricity. Input tax credit on diesel used as fuel for generation of electricity for manufacturing is disallowed. The central excise input definition excludes high speed diesel and petrol as inputs, and HVAT Schedule E treats petroleum products used as fuel as goods for which input tax shall be nil, preventing ITC on diesel used as fuel.