Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
New Delhi, dated 2nd April, 2012
Circular No.964/07/2012-CX
To
All Chief Commissioners of Central Excise & Customs,
All Chief Commissioners of Central Excise,
All Directors Generals
Sir/Madam,
Subject : Clarification regarding classification
of structural components of Boiler and admissibility of CENVAT credit on these
structural components – reg.
Reference has been received from Trade seeking clarification regarding
classification of structural parts/components of Boiler and admissibility of
CENVAT credit on these parts/components to the buyers of the Boilers. It has
been represented that CENVAT credit is being denied to the supporting structural
parts of the Boilers at the buyers’ end by classifying the same under Chapter 73
as structural parts and not as a part of Boiler. These are not being covered
under the definition of inputs under the CENVAT Credit Rules, 2004, on account
of exclusion given in rule 2 (k)(iv)(B)(b). This denial is on the ground that
these are used for structures for support of Capital goods, without which the
Capital goods can function.
2 The matter has been examined in the Board. The Boilers are a combination of
various systems such as Coal Handling System, Coal Feeding System, Draft Air
System, Demineralization Plant, Boiler Feed Water System, Boiler Tubes, Boiler
Drums, Super Heat System, Flue Gases Treatment System and Ash Handling System
etc. All these Systems work in tandem to make a modern Boiler. These Systems
comprise of many parts including structural components which are essentially the
part of Boiler by way of technical specifications. As per Section Note 4 to the
Section XVI of the First Schedule to the Central Excise Tariff Act, 1985, “
Where a machine (including a combination of machines) consists of individual
components (whether separate or interconnected by piping, by transmission
devices, by electric cables or by other devices) intended to contribute together
to a clearly defined function covered by one of the headings in Chapter 84 or
Chapter 85, then the whole falls to be classified in the heading appropriate to
that function.”
3. Accordingly it is clarified that those structural components which are to
be used essentially as a part of Boiler System would be classifiable as parts of
Boiler only under Heading 8402 of the Tariff. It is further clarified that since
these structural components are nothing but the parts and accessories of the
Boiler, they would be covered by the definition of inputs under Rule 2(k)(iii)
of the CENVAT Credit rules, 2004 (i.e. all goods for generation of electricity &
steam). Further these structural components shall not be hit by the exclusion
clause to the said definition of inputs, as these are not used for laying of
foundation or making of structures for support of capital goods, but are
essentially the part of said Boilers.
4. Trade, industry and field formations may be suitably informed.
5. Hindi version will follow.
Yours faithfully,
(Madan Mohan)
Under Secretary (CX1)
F. No. 84/1/2011-CX-1