The Gujarat Authority for Advance Ruling (AAR) has ruled that a Continuous Catenary Vulcanization (CCV) tower qualifies as plant and machinery under the CGST Act, 2017. As a result, manufacturers can claim Input Tax Credit (ITC) on inputs and services used to construct the tower.
This decision provides important clarity for the wire and cable industry, where CCV towers play a critical role in producing insulated electrical cables.
CCV Tower Recognized as Manufacturing Equipment
The case involved Apar Industries Ltd., a manufacturer of conductors, cable solutions, and telecom products. The company installed a CCV tower as part of an integrated facility for producing XLPE insulated cables.
Apar Industries argued that the CCV tower functions as part of the manufacturing system, not as a standalone civil structure. Therefore, it should qualify as plant and machinery, making it eligible for ITC benefits.
Dispute Over ITC Eligibility
The company sought clarification on whether ITC would be restricted under Section 17(5)(c) and (d) of the CGST Act. These provisions typically block ITC claims on immovable property construction.
However, Apar Industries maintained that the CCV tower provides essential structural support for cable production. In addition, it cited relevant case law to support its position.
Meanwhile, the jurisdictional officer argued that the CCV tower qualifies as an immovable structure, which would make ITC claims ineligible.
AAR Decision and Key Findings
After reviewing the case, the Gujarat AAR determined that the CCV tower plays a direct and essential role in the manufacturing process. It also noted that the structure has no independent use outside cable production.
As a result, the authority classified the CCV tower as plant and machinery, not as a civil structure. Therefore, the ITC restriction under Section 17(5) does not apply.
The ruling, issued by Vishal Malani (CGST Member) and Sushma Vora (SGST Member), confirms that manufacturers can claim ITC on inputs and services used to set up CCV towers.
Industry Impact
This decision sets a significant precedent for the wire and cable sector. It clarifies that critical production infrastructure, such as CCV towers, qualifies for tax credit benefits when directly tied to manufacturing operations.
As a result, companies investing in cable production capacity can reduce project costs and improve financial efficiency.
