CENVAT Credit Rules, 2004 - Rule 2

CENVAT Credit Rules, 2004

2. Definitions.- In these rules, unless the context otherwise requires,-

(a) "capital goods" means:-

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

(A) the following goods, namely:-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, ⁴[heading 6805, grinding wheels and the like, and parts thereof falling under ²³[heading 6804 and wagons of sub-heading 860692] ^OLD[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 and pipes and fittings thereof;

(vii) ¹⁴[storage tank;and]

¹⁵[(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis ¹⁷[but including dumpers and tippers]]

used-

(1) in the factory of the manufacturer of the final products, ^Omittedbut does not include any equipment or appliance used in an office; or

¹⁰[(1A) outside the factory of the manufacturer of the final products for generation of electricity or ²⁴[for pumping of water] for captive use within the factory; or]

(2) for providing output service;

¹⁸[(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for-

(i) providing an output service of renting of such motor vehicle; or

(ii) transportation of inputs and capital goods used for providing an output service; or

(iii) providing an output service of courier agency”]

¹⁸[(C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of-

(i) transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii) imparting motor driving skills]

¹⁴[(D) components, spares and accessories of motor vehicles which are capital goods for the assessee]

(d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which

are chargeable to "Nil" rate of duty; ¹⁶[goods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st

March, 2011 or under entries at serial numbers 67 and 128 of Notification No. 12/2012-CE, dated the 17^th March, 2012 is availed]

¹⁸[(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;

²³[but shall not include a service –

(a) which is exported in terms of rule 6A of the Service Tax Rules, 1994; or

(b) by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India;];

^OLD[but shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994.]

Explanation.-

For the removal of doubts, it is hereby clarified that "exempted services" includes trading]]

(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;

(ij) "first stage dealer" means

(i) ²⁰[a dealer, who purchases the goods directly from the manufacturer under the cover of an invoice]

²⁰[(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]

¹¹[(k) "input" means-

(i) all goods used in the factory by the manufacturer of the final product; or

(ii) 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

(iii) all goods used for generation of electricity or steam ²⁴[or pumping of water] for captive use; or

(iv) all goods used for providing any ²³[output service; or] ^OLD[output service];

²⁴[(v) all capital goods which have a value upto ten thousand rupees per piece]

but excludes-

(A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;

¹⁸[(B) any goods used for -

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or

(b) 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;]

(i) used as parts or components in the manufacture of a final product; or

(ii) the value of such capital goods is upto ten thousand rupees per piece]

^OLD[capital goods except when used as parts or components in the manufacture of a final product;]

(D) motor vehicles;

(E) any goods, 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

(F) 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"]

¹¹[(l) "input service" means any service, -

(i) used by a provider of ¹⁸[output service]

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto 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 sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; ¹⁸[but excludes]

¹⁸[(A) service portion in the execution of a works contract and construction services 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 -

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or

(b) 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;]

¹⁴[(B) ¹⁸[services provided by way of renting of a motor vehicle]

¹⁸[(BA) 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) a manufacturer 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 or consumption of any employee "]

²²[Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.]

(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 ²⁴[or an outsourced manufacturing unit], 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;

³(na) "large taxpayer" shall have the meaning assigned to it in the Central Excise Rules, 2002;

¹¹[(naa) "manufacturer" or "producer",-

²⁵[(i) in relation to articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 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 sub-rule (1) of rule 9 of the Articles of Jewellery (Collection of Duty) Rules, 2016;"

(ia) in relation to articles of precious metals falling under heading 7114 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 sub-rule (1) of rule 12AA of the Central Excise Rules, 2002;" (B) in rule 4, in sub-rule (1) of rule 12AA of the Central Excise Rules, 2002;]

^OLD[(i) in relation to articles of ¹²[jewellery or other articles of precious metals falling under heading 7113 or 7114 as the case may be]

(ii) 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 sub-rule (1A) of rule 4 of the Central Excise Rules, 2002 "]

(o) "notification" means the notification published in the Official Gazette;

¹⁸[(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.]

¹[Explanation.-

For the removal of doubts it is hereby clarified that if a person liable for paying service tax does not provide any taxable service or does not manufacture final products, the service for which he is liable to pay service tax shall be deemed to be the output 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;

²¹[(qa) “place of removal” means- ^Refer

(i) a factory or any other place or premises of production or manufacture of the excisable goods;

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;

(iii) 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;]

(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.

Note: Clause (na) has been added vide Notification No. 13/ 2005- CE (NT), Dated 1.3.2005.

1 Omitted vide Notification No. 8/2006-CE. (NT), DT. 19/04/2006

2. Renumbered vide Notification No. 19/2006-CE (NT) Dated 30/9/2006

3. Inserted vide Notification No. 19/2006-CE (NT) Dated 30/9/2006

4. Substituted vide Notification No. 7/2007-CE (NT) Dated 21/2/2007

5. Substituted vide Notification No. 10/2008-CE (NT) Dated 1/3/2008 w.e.f. 1/4/2008

6. Substituted vide Notification No. 10/2008-CE (NT) Dated 1/3/2008 w.e.f. 1/3/2008

7. Inserted vide Notification No. 16/2009-CE (NT) Dated 7/7/2009

8. Inserted vide Notification No. 25/2010-CE (NT) Dated 22/6/2010

9. Inserted Vide Notification No. 29/2010-CE (NT) Dated 24/9/2010

10. Inserted vide Notification No. 3/2011-CE (NT) Dated 1/3/2011

11. Substituted vide Notification No. 3/2011-CE (NT) Dated 1/3/2011