Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
New Delhi, dated the 25th September, 2009
Circular No. 899/19/2009-CX
Subject: Clarification on some important issues related to the ceramic tile
industry -reg.
Attention is invited to
Notification No. 05/2006-CE dated 01.03.06 which
stipulates that Central Excise duty at 8% will be charged on Ceramic tiles
manufactured in a factory not using electricity for firing the kiln on the
condition that “if no credit of the duty paid on the inputs used in or in
relation to the manufacture of such ceramic tiles has been taken under rule 3 or
rule 13 of the CENVAT Credit Rules, 2004”. Representations have been received
from trade & industry stating that objections are being raised by the field
formations holding that taking of Cenvat credit on input services would violate
the condition of the notification.
- 1 The matter has been examined. It is hereby clarified that the notification
debars taking of credit on inputs and not on input services. Further input and
input services are separately defined in the CENVAT Credit Rules, 2004, and the
term ‘input’ does not include ‘input services’. Therefore, taking of credit on
input service would not violate the condition of notification.
- Attention is also invited to the classification of Abrasive stones for the
purpose of availing Cenvat Credit. It may be recalled that till the operation of
6 digit CET, Abrasive stones were classifiable under 680110 and was covered
under the definition of capital goods as per Rule 2(a)(A)(i) of CENVAT Credit
Rules, 2004. However, after the introduction of 8 digits CET, with effect from
28.02.2005, abrasive stones were classified under 6805. Therefore, a view was
taken that the abrasive stones came out of purview of capital goods after
28.02.2005. Vide
Notfn. No. 07/2007-CE (NT) dated 21.02.2007, the heading 6805
was included in the definition of capital goods. Representations have been
received from the trade & industry that because of non-coverage of abrasive
stones under the definition of ‘capital goods’ during the period 28.02.2005 to
20.02.2007, the field formations are taking a view that these goods are in the
nature of ‘input’, therefore, the credit taken on such abrasive stones during
this period, disentitles the units from availing benefit of notification no.
05/2006-CE.
- 1. The matter has been examined. The
notification No. 07/2005-CE (NT) dated
24.02.2005 was issued to take care of such issues arising due to transition from
6 digit to 8 digit CET. Under the said notification, Central Excise (Removal of
Difficulties) Rules, 2005 have been notified. The said Rules provides that the
reference to erstwhile chapter, headings, sub-heading or tariff item under 6
digit CET shall be deemed to have been substituted by the corresponding new
chapter, headings, sub-heading or tariff item under the 8 digit CET in any of
the rules made under Section 37 of the Central Excise Act. The Cenvat Credit
Rules have also been framed under Section 37, therefore, it is clarified that
abrasive stones which were classified under heading 680110 under 6 digit tariff,
would be treated as capital goods even though the same were classified under
heading 6805 in the eight digit tariff for the period 28.02.2005 to 21.02.2007.
Therefore, benefit of notification cannot be denied on this ground.
- Trade & Industry as well as field formations may be suitably informed.
- Receipt of this circular may kindly be acknowledged.
- Hindi version will follow.
Yours faithfully,
(Amish Kumar Gupta)
OSD (CX-8)
F.No.267/90/2009-CX-8 (Pt.1)