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ST - CENVAT - Dumpers are specially designed for earth moving in mining area; are not motor vehicles: CESTAT

By TIOL News Service

NEW DELHI, JULY 15, 2017: THE appellant is engaged in providing site formation and clearance, excavation and earth moving and demolition services. Dispute relates to availment of Cenvat Credit on dumpers/tippers. The department viewed that dumpers /tippers are classifiable under Chapter 87 as motor vehicles and hence not capital goods. Inasmuch as credit availed by the appellant during the period 2005-2006 to 2008-2009 was denied. It is also alleged that the original/duplicate copies are either deficient or not available.

After considering the submissions, the CESTAT inter alia observed -

++ There is no dispute about the fact that earth moving equipments such as dumpers are being used by appellant to provide output service; dumpers even if classifiable under Chapter 87 can be considered within the definition of inputs, as per Rule 2(k) of CCR, 2004.

++ Dumpers/Tippers are vehicles which are specially designed for earth moving purposes and are meant to be used in mining area. In view of decision of Supreme Court in case of Belani Ores Ltd. [1975 AIR 17, 1975 SCR (2) 138 ] they are not to be considered as motor vehicles. Consequently, the appellant would be eligible for cenvat credit on dumpers / tippers as inputs which are used for providing output service. However, the controversy stand resolved with effect from 22.6.2010 with issue of notfn 25/2010-CE (NT) which has amended the Cenvat Credit Rules to allow cenvat credit for dumpers / tippers registered in the name of service provider for providing taxable service of site formation.

Noting that the credit has also been denied on the ground of deficient/unavailable invoices, the Bench remanded the matter to the adjudicating authority.

Quick reference - Notification 25/2010-CE(NT) dated June 22, 2010:

2. In the CENVAT Credit Rules, 2004, in rule 2, in clause (a), after sub-clause (B), the following sub-clause shall be inserted, namely:-

"(C) dumpers or tippers, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), registered in the name of provider of output service for providing taxable services as specified in sub-clauses (zzza) and (zzzy) of clause (105) of section 65 of the said Finance Act;".

In passing: Retrospective notification? Also see Northern Coalfields - 2017-TIOL-2311-CESTAT-DEL .

(See 2017-TIOL-2432-CESTAT-DEL)