Gujarat AAR Allows ITC On Inputs, Services Used To Set Up CCV Tower For Insulated Cable Manufacturing

The Gujarat Authority for Advance Ruling (AAR) has ruled that Apar Industries Ltd. can avail Input Tax Credit (ITC) on goods and input services used for setting up a Continuous Catenary Vulcanization (CCV) tower at its manufacturing facility. The tower is used in the manufacture of insulated electrical cables.

A bench comprising CGST Member Vishal M. Ladani and SGST Member Subham Roy passed the ruling in an application filed by Apar Industries Ltd.

“On going through the layout of the CCV tower and the process undertaken at different levels in the CCV tower as detailed in para 15 above, we are in agreement with the applicant's averment that the CCV tower made of specialised steel structure is essential to support and erect the CCV lines. It is more so since the applicant has stated that the specialised steel structure in the form of CCV tower serves as a critical and essential structural support system to the entire CCV machine line for manufacture of insulated cables while maintaining the structural integrity, stability, precision and overall efficiency of the support system for the manufacture of insulated cables. ,” the Authority observed.

The applicant stated that it was setting up a new manufacturing facility for high-voltage cross-linked polyethylene (XLPE) insulated electrical cables. It proposed to install a CCV tower as an integral part of the production line.

According to the applicant, the CCV tower was a specialised vertical steel structure designed to support machinery used in vulcanization and continuous cable manufacturing processes. The applicant argued that the tower was not merely a civil structure. It was an essential structural support system for plant and machinery.

Before the authority, the applicant contended that the restriction on availment of ITC on construction-related goods and services would not apply. According to the applicant, the CCV tower fell within the definition of “plant and machinery” under the CGST Act.

The applicant also relied upon CBIC Circular No. 219/13/2024-GST dated June 26, 2024. The circular clarified availability of ITC on ducts and manholes used in optical fiber cable networks. The applicant further relied on the Gujarat Appellate Authority for Advance Ruling's decision in KEI Industries Ltd. involving a similar CCV tower structure.

Accepting the contention, the AAR noted that the CCV tower maintained structural integrity, stability, precision and operational efficiency of the manufacturing line. It therefore functioned as an essential support system for manufacture of insulated cables.

The bench further held that the exclusion relating to “land, building or civil structures” under the definition of plant and machinery would not apply. It observed that the CCV tower was integrally connected with the manufacturing process.

Drawing support from the CBIC circular relating to optical fibre cable ducts and manholes, the Authority held that if ITC could be allowed on support infrastructure necessary for transmission systems, similar treatment should apply to the CCV tower supporting insulated cable manufacturing lines.

Accordingly, the Gujarat AAR ruled that Apar Industries Ltd. was entitled to avail ITC on inputs and input services used for construction and erection of the CCV tower at its manufacturing facility.