Thursday, October 22, 2015

Cenvat Credit Rules 2004 Definitions

ALSO APPLICABLE FOR NOVEMBER - 2015 EXAM

(A) "capital goods" means :

a. The following goods, namely :

(i) All goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.05 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 andpipes and fittings thereof; 
(vii) Storage tank; and
(viii) Motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassisbut including dumpers and tippers,used-
  (1) . In the factory of the manufacturer of the finalproducts, 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-
  • Providing an output service of renting of such motor vehicle; or
  • Transportation of inputs and capital goods used for providing an output service; or 
  • 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 outputservice of-
  • Transportation of passengers; or
  • Renting of such motor vehicle; or 
  • Imparting motor driving skills"

d. Components, spares and accessories of motor vehicles which are capital goods for theassesse.

Tariff headings 8702, 8703, 8704, 8711 are as follows :
  1. Motor vehicles for the transport of 10 or more persons, including the driver.
  2. Motor cars and other motor vehicles principally designed for the transport of persons (other thanthose covered in (i) above), including station wagons and racing cars. 
  3. Motor vehicles for transport of goods. 
  4. Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side cars.
Is a cellular mobile serviTariff Act"ce provider entitled to avail CENVAT credit on tower parts & pre-fabricated buildings (PFB)?RTP-N-2015

Bharti Airtel Ltd. v. CCEx. Pune III 2014 (35) STR 865 (Bom.)

High Court‟s Decision : The High Court rejected the appeals of the appellant and upheld the findings of the Tribunal holding that the mobile towers and parts thereof and shelters / prefabricated buildings are neither capital goods under rule 2(a) nor „inputs‟ under rule 2(k) of the CCR. Hence, CENVAT credit of the duty paid thereon by a cellular mobile service provider was not admissible.

(B) Customs Tariff Act means the Customs Tariff Act, 1975 (51 of 1975);

(C) "Excise Act" means the Central Excise Act, 1944 (1 of 1944);

(D) "exempted goods" means excisable goods whichare exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty,andgoods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 01.03.2011 @2% or underentries at serial numbers 67(coal)and 128(fertilizers)of Notification No. 12/2012-CE, dated the 17.03. 2012@1%is availed"

(E) Exempted service means a-
  1. Taxable service which is exempt from the whole of the service tax leviable thereon; or 
  2. Service, on which no service tax is leviable under section 66B of the Finance Act; or
  3. Taxable service whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken;but shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994.'
(F) "Excise Tariff Act" means the Central Excise Tariff Act, 1985 (5 of 1986);

(G) "Finance Act" means the Finance Act, 1994 (32 of 1994);

(H) "final products" means excisable goods manufactured or produced from input, or using input service;

(I,J) "first stage dealer" means a dealer, who purchases the goods directly from,-

i.  The manufacturer under the cover of an invoice issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or

ii.  An importer who sells goods imported by him under the cover of an invoice on which CENVAT credit may be taken and such invoice shall include an invoice issued from his depot or the premises of his consignment agent"(31.12.2013)

ii.  An importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice

(K) "input" means-
  1. All goods used in the factory by the manufacturer of the final product; or
  2. 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
  3. All goods used for generation of electricity or steam for captive use; or 
  4. 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 -

  • Constructionor execution of works contract of a building or a civil structure or a part thereof; or
  • Laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;"
  • Capital goods except when used as parts or components in the manufacture of a final product;
  • Motor vehicles;
  • Anygoods, 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
  • Any goods which have no relationship whatsoever with the manufacture of a final product.

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,-
  1. Used by a provider of outputservice for providing an output service; or
  2. Used by a manufacturer, whether directly or indirectly, in or in relation to the manufactureof final products and clearance of final products up to the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or salespromotion, market research, storage upto the place of removal, procurement of inputs, accounting,auditing, financing, recruitment and quality control, coaching andtraining, computer networking,credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto theplace of removal; but excludesservices,-
a. service portion in the execution of a works contract and constructionservices including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -

  • construction or execution of works contract of a building or a civil structure or a part thereof; or
  • 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 provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or

  • b (a). service of general insurance business, servicing, repair and maintenance , in so far as they relate to a motor vehicle which is not a capital goods, except when used by -
  • a. amanufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person ; or
  • b. an insurance company in respect of a motor vehicle insured or reinsured by such person; 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 orconsumption of any employee;‟;

Whether sales commission services are eligible input services for availment of CENVAT credit? If there is any conflict between the decision of the j urisdictional High Court and the CBEC circular, then which decision would be binding on the Department? Also, if there is a contradiction between the decision passed by jurisdiction High Court and another High Court, which decision will prevail? (RTP-N-2015)

Astik Dyestuff Private Limited v. CCEx. & Cus. 2014 (34) STR 814 (Guj.)

High Court’s Decision: The High Court held that –
  1. If there is any conflict between the decision of the jurisdictional High Court and the CBEC Circular, then decision of the jurisdictional High Court will be binding to the Department rather than CBEC Circular. Therefore, the assessee would not be entitled to CENVAT credit on sales commission services obtained by them .
  2. Merely because there might be a contrary decision of another High Court is no ground to refer the matter to the Larger Bench.
  3. When there are two contrary decisions, one of jurisdictional High Court and another of the other High Court, then the decisionof the jurisdictional High Court would be binding to the Department and not the decision of another High Court.
Whether (i) technical testing and analysis services availed by the assessee for testing of clinical samples prior to commencement of commercial production and (ii) services of commission agent are eligible input services for claiming CENVAT?RTP-N-2013+SCL-8
 

CCEx v. Cadila Healthcare Ltd. 2013 (30) S.T.R. 3 (Guj.)

Decision: The High Court held that technical testing and analysis services availed for testing of clinical samples prior to commencement of commercial production were directly related to the manufacture of the final product and hence, were input services eligible for CENVAT credit.
With respect to the services provided by foreign commission agents, the High Court held that since the agents were directly concerned with sales rather than sales promotion, the services provided by them were not covered in main or inclusive part of definition of input service as provided in rule 2(l) of the CENVAT Credit Rules, 2004.

(M) "input service distributor" means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be;

(N) "job work" means processing or working upon of raw material or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for aforesaid process and the expression "job worker" shall be construed accordingly;

n (a).  "large taxpayer" shall have the meaning assigned to it in the Central Excise Rules, 2002.
n (aa).  “manufacturer” or “producer”,-
  1. In relation to articles ofjewellery or other articles of precious metals falling under heading 7113 or 7114 as the case may be of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under rule 12AA(1) of the Central Excise Rules, 2002;
  2. In relation to goods falling under Chapters 61, 62 or 63 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under rule 4 (1A) Central Excise Rules, 2002;‟;
(O) "notification" means the notification published in the Official Gazette;

(P) "output service" means any service provided by a provider of service located in the taxable territory but shall not include a service,-
  1. Specified in section 66D of the Finance Act; or
  2. Where the whole of service tax is liable to be paid by the recipient of service.'
(Q) "person liable for paying service tax" has the meaning as assigned to it in clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994;

q (a) “place of removal” means-
  1. a factory or any other place or premises of production or manufacture of the excisable goods;
  2. a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; 
  3. a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory, from where such goods are removed.(11.07.2014)
(R) "provider of taxable service" include a person liable for paying service tax;

(S) "second stage dealer" means a dealer who purchases the goods from a first stage dealer;

(T) words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts.

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