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Admissibility of CENVAT Credit to Inputs and Capital Goods used by the
Manufacturer outside the Factory Premises
Central
Excise Circular No. 637 dated 8th May 2002
Board�s
attention has been drawn to the Supreme Court Judgement in Civil Appeal No.
5340-5341 of 2000 in the case of M/s Jaypee Rewa Cement wherein the Apex Court
has held that MODVAT credit on explosives used in mines (which are outside the
factory premises for mining of lime stone (intermediate product) shall be
available to the manufacturing unit under Rule 57 J of the erstwhile Central
Excise Rules, 1944, Accordingly, the matter of admissibility of Cenvat Credit on
inputs and capital goods when these are used outside the factory of manufacture
of final product has been reviewed by Board in the light of new CENVAT Rules
which came into force w.e.f. 1.7.2001.
2.
It has been observed by the Board that �inputs� have been defined
under Rule 2 (f) of Cenvat Credit Rules, 2001 as below:
�Input
means all goods except High Speed Diesel Oil & Motor spirit used in relation
to the manufacture of final products whether directly or indirectly &
whether contained in the final product or not _________ used for manufacture of
final products or for any other purpose, within the factory of production.�
3.
Similarly, Capital goods have been defined under Rule 2 (b) of the said
Rules as those items, which are used in the factory of the manufacturer of
final products. Moreover, as per Rule 3 (1) of the said Rules, credit on
inputs is also admissible when inputs are used in the manufacture of
intermediate products by a job worker availing the benefit of Notification No.
214/86-CE dated 25.3.86. Further, in terms of Rule 4 (5), capital goods may be
sent to a job-worker�s premises for production of goods. Therefore, in view of
the said statutory provisions contained in Cenvat Credit Rules, 2001 cited
above, Cenvat Credit is admissible only when the inputs or Capital goods are
used by the manufacturer within the factory premises [except when inputs or
capital goods are used/ sent for job work outside factory]. This position
remains unchanged in the present Cenvat Credit Rules, 2002.
4.
Trade and field formation may please be informed suitably.
5.
Receipt of the same may please be acknowledged.
6.
Hindi version will follow.
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