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Cenvat credit

Vijay Ramani (M.Com) (31 Points)

23 February 2015

Hi,

We are Logistcs Service Provider and we have Trucks, Trailers & Cranes in our fleet list, Some of these are used to provide Hiring Services i.e. Supply of Tangible Goods Service. on monthly basis.

My question is can we take CENVAT Credit against Liability of Service Tax from the Excise duty of such vehicles purchased. If so how ? Further can it be adjusted in one year ?

Please suggest

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2 Replies

Vikas (CA) (1135 Points)
Replied 26 February 2015

Hi Vinay,

You need to firstly, determine whether such vehicles are covered under the definition of Capital Goods under Rule 2(a) of the Cenvat Credit Rules, 2004 (CCR), which is as under –

“capital goods” means :-

(A) the following goods, namely :-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;

(ii) pollution control equipment;

(iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;

(vi) tubes and pipes and fittings thereof;

(vii) storage tank, and

(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tippers,

used -

(1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or

(1A) outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory; or

(2) for providing output service;

(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for -

(i) providing an output service of renting of such motor vehicle; or

(ii) transportation of inputs and capital goods used for providing an output service; or

(iii) providing an output service of courier agency;

(C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of -

(i) transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii) imparting motor driving skills;

(D) components, spares and accessories of motor vehicles which are capital goods for the assessee;”

Generally the cranes, etc. are covered under the Chapter 85. You may check from the invoice copy. If yes, then the same should be covered under the definition of Capital Goods.

Secondly, the trucks are used for transportation of goods and I believe you are giving such trucks on hire. Thus, again the same should be considered as Capital Goods.

Thus, you should be eligible to claim Cenvat credit on such Capital Goods upto 50% in the first year (i.e., the year of purchase) and rest in the subsequent year.