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CENVAT CREDIT ON GREASE & LUB. OIL

SANTISWARUP CHAKRABORTY (Indirect Taxation) (38 Points)

31 July 2008

PLEASE PROVIDE YOUR VALUABLE OPINION AS FOLLOWING QUIRES :-

if factory is under construction and installation of machinery and we purchased hugh quantity Grease and Lub oil use for machines. It is not running factory.

In this situation can I treat CENVAT on Grease and Lub oil as capital goods?

Thanks,

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10 Replies

Prakash.R (student) (22 Points)
Replied 31 July 2008

If the machinery installed is used for production of goods then it is to be treated as capital goods and the relevant rate duty is to be paid as applicable under the central excise tariff act.

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SANTISWARUP CHAKRABORTY (Indirect Taxation) (38 Points)
Replied 31 July 2008

My question is how I availed CENVAT on Grease and Lub Oil during factory installation perion?

Because it is not running factory.

prachee (Indirect Tax) (167 Points)
Replied 01 August 2008

dear Santiswarup

please go thourgh the defination this will help you a lot.... and specilly the Expalantion -2

k) "input" means-

(i) all goods, except light diesel oil, 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 in or in relation to manufacture of final products or for any other purpose, within the factory of production;

(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;

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

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

SANJOO (WORK) (26 Points)
Replied 01 August 2008

Based on the infomation given in the QS, Cevant Credit on Grease and Lub Oil cannot not be availed becasue these are not the capital goods.

The definition of "Input" (cited by prachee) is not applicable here, as qs is for the factory under construction.

Sanjay Dwivedi (Advocate & Consultant) (143 Points)
Replied 01 August 2008

Grease & Lube oil are not 'capital goods' under Cenvat Credit Rules, 2004.

These are 'input' when used in or in relation to manufacture of final products.

Credit of duty paid on 'capital goods' installed at the time of setting up of the unit can be availed when you commence production and obtain registration. [Refer CBEC Circular no. 88/94]. You should maintain record (a list of the capital goods, with details of corresponding invoices).

Similarly, you are entitled to avail credit of taxable services used to set up the factory or office of the factory. These are defined to be 'input service'.

Since you are not presently registered, it would be better to keep the department informed (that you would avail credits after you apply for registration).

You would also be entitled to credit of the duty paid on inputs that are available as opening stock on the date of your application for registration. However, you should maintain stock register as evidence of the stock.

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Vineet Bansal (Serving as AM- Accounts) (60 Points)
Replied 13 August 2008

we can take the credit of duty paid on Grease & Lube used in the construction and installation of Machinery

RAJENDRA ATMARAM AHIRE (accountant) (57 Points)
Replied 11 March 2009

Dear All !

Can i take the credit of cutting oil & grease ?

pls. advice me.

Tahnx

Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 14 March 2009

Yes. These items are specifically covered in the definition of input under Cenvat Credit Rules.

vivek dixit (account officer) (21 Points)
Replied 16 November 2010

Plese give your unvaluable views

we are a duty paying manufacturer.

I purchased generator and electrical panel for factory. can i take credit of duty paid on purchase of these two item . please guide me with proper government notification