06 December 2012
Cenvat Credit Rules – Credit of Inputs, Capital Goods and Input Services Credit of input services can be taken on accrual basis like excise (but if payment is not made in three months then credit has to be reversed and can be re - credited when paid) “Input” means –
(i) All goods used in the factory by the manufacturer of the final product; or (earlier it was in or in relation to manufacture of final product)
(ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (this is new inclusion)
(iii) All goods used for generation of electricity or steam for captive use; or
(iv) All goods used for providing any output service;
But excludes- (A) Light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;
(B) Any goods used for- (a) Construction 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, (C) Capital goods except when used as parts or components in the manufacture of a final product, (D) Motor vehicles;
(E) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and
(F) Any goods which have no relationship whatsoever with the manufacture of a final product. All these are new exclusions
Explanation – For the purpose of this clause, “free warranty” means a warranty provided by the manufacturer, the value of which is included in the price of the final product and is not charged separately from the customer;‟;
(l) “Input service” means any service, -
(i) Used by a provider of taxable service for providing an output service; or
(ii) Used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal, and includes services used in relation to: 1. Modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, 2. Advertisement or sales promotion, market research, 3. Storage up to the place of removal, 4. Procurement of inputs, 5. Accounting, 6. Auditing, 7. Financing, 8. Recruitment, 9. Quality control, 10. Coaching and training, 11. Computer networking, 12. Credit rating, 13. Share registry, 14. Security, 15. Business exhibition, 16. Legal services, 17. Inward transportation of inputs or capital goods and outward transportation up to the place of removal;
But excludes services, - (all these are new exclusions)
(A) Services used for- (a) Construction 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 one or more of the specified services; or
(B) Services related to a motor vehicle; or
(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;‟;
List of Inputs and Input Services – NO CENVAT CREDIT – W.E.F. 01.04.2011 (When Invoice Date is on or after 01.04.2011)
ANY GOODS USED FOR:
- Construction of a building or a civil structure or part thereof (i.e. CEMENT, STEEL) - Laying of foundation or making of structure for support of capital goods (i.e. Angle, Rods, Sheets) - Motor Vehicles (like Tow Tractors, Mobile Cranes - all vehicles of Chapter 87)
ANY GOODS USED AS or IN: - Food Items - Goods used in guesthouse - Residential Colony - Club - Clinical Establishment
SERVICES RECEIVED IN RESPECT OF:
- Construction of a Building or a Civil Structure or part thereof - Laying of foundation or making of structures for support of capital goods - Services related to Motor Vehicles a) Repair and maintenance of leased or capitalized cars b) General Insurance of these cars c) Tax paid on lease rent for these cars
- Vehicles used for transport of employees - Hired Taxies - Hiring of Mobile Cranes - Outdoor Catering – Canteen - Health Checks - Life or Medical Insurance - Club membership - Any service at the residence of an employee (like security, repair and maintenance)
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