Structural
Components used as a Part of Boiler System Classifiable as Parts of Boiler
under Heading 8402
[CBEC
Circular No. 964 dated 2nd April 2012]
Subject: Clarification regarding classification of structural components
of Boiler and admissibility of CENVAT credit on these structural components.
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.
F. No. 84/1/2011-CX-1