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Cenvat on TMT Bar

SAMEER (CHARTERED ACCOUNTANT) (304 Points)

26 August 2008

Dear Freinds

can u tell me please, that cenvat credit on TMT bar used in errection of plant & machinery are eligible for Cenvat credit or not and why ?

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7 Replies

CA MOHIT VAATS (Consultant) (554 Points)
Replied 26 August 2008

it is eligible for Cenvat Credit...... It is require for proper working of machinery/ installation of machinery...

Member view is also welcome on this.....

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SAMEER (CHARTERED ACCOUNTANT) (304 Points)
Replied 26 August 2008

But TMT Bar is does not come under inclusive list of Capital Goods (Chapter 82 etc of tarriff)

S.P.Mahanta (Internal Auditor) (647 Points)
Replied 08 September 2008

TMT bar cannot be eligible for Cenvat Credit since, such in no way is related to manufacture, and neither it participates in amnufacturing process. However, such exp: can be capitalised & included in cost of Plant & Machinery to avail depreciation benefit.

SIDDHARTHA SANKAR ROY (Government Servant -MOF) (868 Points)
Replied 16 October 2008

From your query it is not evident whether you are manufcturer or a "erection, commissiong and installation " service provider. If you are manufcturer then you can avail the cenvat credit avaible used in installation of your plant and machinery which would qulify as

(i) input for a manufacture as per CR Rules, 2004 means all goods used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not including lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, except LDO, HSD,MS . As long as it is used within the factory premises.

(ii) and if you are service provider, also the CENVAT would be available.

SIDDHARTHA SANKAR ROY (Government Servant -MOF) (868 Points)
Replied 16 October 2008

From your quary it it not evident whether you are a manufacturer or "erection, commissioing and installation" service providers. In both the cases you should be eligible to avail credit. As direct relation to manufacture is not required to avail CENVAT credit as long the machine is installed within the factory premises and used for manufacturing of dutiable final product and the bars are purchased under a cenvatable invoice. In latter case also you should be able to avail if TMT bars are used for erection.

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Shree Ji Steel Corporation (staff) (22 Points)
Replied 16 August 2023

TMT bars, also known as Thermo-Mechanically Treated bars, are commonly used in construction for reinforcement purposes due to their high strength and ductility. They are manufactured by subjecting mild steel bars to a combination of heat treatment and mechanical processes.

Before GST, when CENVAT was in effect, TMT bars were subject to excise duty, which was a component of CENVAT. Excise duty was a tax on the manufacture or production of goods within the country. The excise duty rate on TMT bars varied based on factors such as the material composition and size of the bars.

With the introduction of GST, multiple indirect taxes, including CENVAT and excise duty, were replaced by a single unified tax system. GST is a comprehensive tax that applies to the supply of goods and services throughout India. Under GST, TMT bars are classified under the heading 7214 and are subject to a specific GST rate, which may vary based on factors such as the size and grade of the bars.

It's important to note that my knowledge is based on information available up until September 2021, and there may have been changes or developments in tax regulations since that time. For the most up-to-date and accurate information, it's recommended to refer to official government sources or consult with a tax professional.