RCC Tower Constructed for Supporting EHV Cable Manufacturing Line Qualifies as Plant and Machinery: AAR Allows ITC to Polycab India [Read Order]

The Authority for Advance Ruling (AAR) Gujarat held that the RCC tower constructed for supporting a Vertical Continuous Vulcanization (VCV) line used in Extra High Voltage (EHV) cable manufacturing qualifies as plant and machinery, thereby allowing ITC on inputs and input services used in its construction.

The applicant, Polycab India Limited is engaged in the manufacture and supply of wires, cables and electrical products. For the manufacture of EHV cables the company installed a VCV line, a technologically advanced and vertically designed production system requiring a specially constructed RCC tower extending several floors in height.

Before the Authority, the applicant stated that the RCC tower was not a civil structure simpliciter but an indispensable and integral component of the VCV manufacturing system. Further, It was argued that the VCV line could not function without the specially designed structure and that the tower was engineered exclusively to house and support the manufacturing equipment.

The applicant further submitted that the restriction under Section 17(5)(c) and Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 relating to blocked credit on construction of immovable property, would not apply since the structure qualifies as plant and machinery.

However, the jurisdictional officer opposed the claim by contending that the RCC tower amounted to an immovable civil structure. It was argued that ITC on goods and services used for its construction is specifically barred under Section 17(5) of the CGST Act 2017.

After examining the technical nature and functional necessity of the structure, the Authority observed that the RCC tower was specially designed to support the VCV line and had no independent utility outside the manufacturing process. The Authority noted that the structure formed an integral part of the manufacturing apparatus and was essential for production of EHV cables.

The Bench comprising Vishal Malani (Member CGST) and Sushma Vora (Member SGST) held that the RCC structure satisfied the definition of plant and machinery under the GST law and therefore the restriction contained in Section 17(5)(c) and (d) would not apply.

Accordingly, the Bench ruled in favour of the applicant and held that ITC on inputs and input services used for construction of the RCC tower supporting the VCV line is admissible under the CGST Act.

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