1. Definitions. – In these rules, unless the context otherwise requires,-

(a)”capital goods” means:-

(A) the following goods, namely:-

[3] (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under 35[heading 6804 and wagons of sub-heading 860692] of the First Schedule to the Excise Tariff Act;

(ii) pollution control equipment;

(iii) components, spares and accessories of the goods specified at (i) and (ii);

(iv) moulds and dies, jigs and fixtures;

(v) refractories and refractory materials;

  (vi) tubes and pipes and fittings thereof; 16[***]

   (vii) 17[storage tank and]

   18[(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis,22[but including dumpers and tippers]]

   used-

   (1) in the factory of the manufacturer of the final products, 36[***]; or

   9[(1A) outside the factory of the manufacturer of the final products for generation of electricity 37[or for pumping of water] for captive use within the factory; or]

    (2) for providing output service;

   23[(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for-

     (i) providing an output service of renting of such motor vehicle; or

     (ii)  transportation of inputs and capital goods used for providing an output service; or

     (iii) providing an output service of courier agency]

   7[(C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of-

                    (i)  transportation of passengers; or

                    (ii) renting of such motor vehicle; or

                    (iii)  imparting motor driving skills]

8[(D) components, spares and accessories of motor vehicles which are capital goods for the assesse,]

(b) “Customs Tariff Act” means the Customs Tariff Act, 1975 (51 of 1975);

(c) “Excise Act” means the Central Excise Act, 1944 (1 of 1944);

(d) “exempted goods” means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to “Nil” rate of duty 10[goods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 or under entries at   serial numbers 67 and 128 of  Notification No. 12/2012-CE, dated the 17th  March, 2012 is availed]

24[(e) “exempted service” means a-

(1) taxable service which is exempt from the whole of the service tax leviable thereon; or

(2) service, on which no service tax is leviable under section 66B of the Finance Act; or

(3) taxable service whose part of value is exempted on the condition that no credit of   inputs and input services, used for providing such taxable service, shall be taken;

 38[but shall not include a service –

(a) which is exported in terms of rule 6A of the Service Tax Rules, 1994; or

(b) by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India;].]

 (f) “Excise Tariff Act” means the Central Excise Tariff Act, 1985 (5 of 1986);

(g) “Finance Act” means the Finance Act, 1994 (32 of 1994);

(h) “final products” means excisable goods manufactured or produced from input, or using input service;

(ij) “first stage dealer” means 30[a dealer, who purchases the goods directly from],-

      (i)  31[the manufacturer under the cover of an invoice] issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or

   32[(ii) an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice;]

12[(k) “input” means–             

           (i) all goods used in the factory by the manufacturer of the final product; or

          (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or

          (iii) all goods used for generation of electricity or steam 39[or pumping of water] for captive use; or

          (iv) all goods used for providing any 40[output service; or];

         41[(v) all capital goods which have a value upto ten thousand rupees per piece. but excludes-

  (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;

25[(B) any goods used for –

 (a) construction or execution of works contract of a building or a civil structure or a part thereof; or

 (b)  laying of foundation or making of structures for support of capital goods,

except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;]

42[(C) capital goods, except when,-

(i) used as parts or components in the manufacture of a final product; or

(ii) the value of such capital goods is upto ten thousand rupees per piece;]

(D) motor vehicles;

(E) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and

(F) any goods which have no relationship whatsoever with the manufacture of a final product.

Explanation. – For the purpose of this clause, “free warranty” means a warranty provided by the manufacturer, the value of which is included in the price of the final product and is not charged separately from the customer;]

13[(l) “input service” means any service, –

 (i) used by a provider of 26[output service] for providing an output service; or

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; 27[but excludes],-

28[(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for –

(a)  construction or execution of works contract of a building or a civil structure or a part  thereof; or

(b) laying of foundation or making of structures for support of capital goods,

except for the provision of one or more of the specified services; or]

20[(B) services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods; or

21[(BA)  service of general insurance business, servicing, repair and maintenance , in so far as they relate to a motor vehicle which is not a capital goods,  except when used by –

(a) a manufacturer of a motor vehicle in respect of  a motor vehicle manufactured by  such person ; or

(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or]

(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;”

34[Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.]

 (m) “input service distributor” means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider 43[or an outsourced manufacturing unit], as the case may be;

(n) “job work” means processing or working upon of raw material or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for aforesaid process and the _expression “job worker” shall be construed accordingly;

(na) “large taxpayer” shall have the meaning assigned to it in the Central Excise Rules, 2002

14(naa) “manufacturer” or “producer”,-

(i) in relation to articles of 15[jewellery or other articles of precious metals falling under heading 7113 or 7114 as the case may be] of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under subrule (1) of rule 12AA of the Central Excise Rules, 2002;

(ii) in relation to goods falling under Chapters 61, 62 or 63 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods undersub-rule (1A) of rule 4 of the Central Excise Rules, 2002;‟;

(o) “notification” means the notification published in the Official Gazette;

29[(p) “output service” means any service provided by a provider of service located in the taxable territory but shall not include a service,-

(1) specified in section 66D of the Finance Act; or

(2) where the whole of service tax is liable to be paid by the  recipient of service.]

(q) “person liable for paying service tax” has the meaning as assigned to it in clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994;

33[(qa) “place of removal” means-

(i) a factory or any other place or premises of production or manufacture of the excisable goods;

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;

(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory,

from where such goods are removed;]

(r) “provider of taxable service” include a person liable for paying service tax;

(s) “second stage dealer” means a dealer who purchases the goods from a first stage dealer;

(t) words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts.

********************

Notes:-

 1. explanation to clause 2(p) has been omitted vide notification no. 08/2006 CE(NT) dated 19-4-2006
2. Old sub rule (na) has been renumbered as (naa) and new sub rule (na) has been inserted with effect from 30-9-2006 vide notification no. 19/2006 CE(NT) dated 30-9-2006
3. In rule 2, in clause (a), in sub-clause (A), in item (i), for the words and figures “heading No.68.02 and sub-heading No.6801.10”, the words and figures “heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804” has been substituted vide notification no. 7/2007 CE(NT) dated 21-2-2007
4. in clause (l), for the words “clearance of final products from the place of removal”, the words “clearance of final products, upto the place of removal,” has been substituted wide notification no. 10/2008 CE(NT) dated 1-3-2008 with effect from 1-4-2008;
5. in clause (p), for the words “any taxable service provided by the provider of taxable service”, the words “any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service” has been substituted with effect from the 1st day of March, 2008 vide notification no. 10/2008 CE(NT) dated 1-3-2008.
6. The words inserted vide notification no. 16/2009 CE (NT) dated 7-7-2009
7. Inserted, vide Notification No. 25/2010 – Central Excise (N.T.), dated 22.06.2010. Further Substituted videNotification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:-“(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.”
8. Substituted vide notification no. 18/2012 CE(NT) dated 17-3-2012, w.e.f. 1-4-2012, before it was read as,

“(D) components, spares and accessories of motor vehicles, dumpers or tippers, as the case may be, used to provide taxable services as specified in sub-clauses (B) and (C)”

Earlier it was Inserted vide Notification no. 29/2010 – CE(NT) dated 24-9-2010.

9. Inserted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.4.2011
10. Inserted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.3.2011 Further Substituted videNotification No. 21/2012– Central Excise (N.T.), dated 27/03/2012, before it was read as:- “and goods in respect of which the benefit of an exemption under notification No. 1/2011-CE, dated the 1st March, 2011 is availed”
11. Inserted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.4.2011
12. Substituted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.4.2011, before it was read as,

“[(k) “input” means-

(i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production;

(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;

Explanation 1. – The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever;

Explanation 2. – Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer 6[but shall not include cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods];]”

13. Substituted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.4.2011, before it was read as,

“[ (l) “input service” means any service,-

(i) used by a provider of taxable service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and [4][clearance of final products, upto the place of removal],

and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;]”

14. Substituted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.3.2011, before it was read as,

“[ [2](naa) “manufacturer” or “producer” in relation to articles of jewellery falling under heading 7113 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under sub-rule (1) of rule 12AA of the Central Excise Rules, 2002;]’

15. Substituted vide notification no. 9/2011 CE(NT) dated 24.3.2011, before it was read as, “jewellery falling under heading 7113”
16. Omitted vide notification no. 18/2012 CE(NT) dated 17-3-2012 w.e.f. 1-4-2012, before it was read as, “and”
17. Substituted vide notification no. 18/2012 CE(NT) dated 17-3-2012 w.e.f. 1-4-2012, before it was read as, “storage tank,”
18. Inserted vide notification no. 18/2012 CE(NT) dated 17-3-2012, w.e.f. 1-4-2012
19. Inserted vide notification no. 18/2012 CE(NT) dated 17-3-2012, w.e.f. 1-4-2012
20. Substituted vide notification no. 3/2011-CE(NT) dated 1.3.2011 w.e.f. 1.4.2011, before it was read as,

“(B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or” Further Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:- “specified in sub-clauses (o) and (zzzzj) of clause (105) of section 65 of the Finance Act

21. Substituted vide Notification No. 21/2012– Central Excise (N.T.), dated 27/03/2012, before it was read as:- “specified in sub-clauses (d) and (zo) of clause (105) of section 65 of the Finance Act,” Further Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:- “(BA)21[specified in sub-clauses (d) and (zo) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle which is not a capital goods,” shall be substituted with effect from the first day of April, 2012] except when used by –

(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by him; or

(b) a provider of output service as specified in sub-clause (d) of clause (105) of section 65 of the Finance Act, in respect of a motor vehicle insured or reinsured by him; or]

22. Inserted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012
23. Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:-“(B) motor vehicle 19[falling under tariff headings 8702, 8703, 8704, 8711 and their chassis] registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of section 65 of the Finance Act;”
24. Substituted vide  “exempted services” means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act 11[and taxable services whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken]

 11[Explanation.- For the removal of doubts, it is hereby clarified that “exempted services” includes trading.]

25. Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:-“( “(B) any goods used for-

(a) construction of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods, except for the provision of any taxable service specified in sub-clauses (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act;”

26. Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:-“ “ taxable service”
27. Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:-“ but excludes services”
28. Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:- “(A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for-

(a) construction of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or”

29. Substituted vide Notification No.28/2012-Central Excise (N.T), Dated 20/06/2012 , before it was read as:-“output service” means [5][any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service], to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions ‘provider’ and ‘provided’ shall be construed accordingly;

[1] Explanation – xxx”

30. Omitted vide Notification No. 18 /2013-Central Excise (N.T.) dated December 31, 2013 w.e.f. 1st day of March, 2014 but the same was Recinded vide Notification No. 07/2014 – Central Excise (N.T.) dated 26th February, 2014
31. Substituted vide Notification No. 18 /2013-Central Excise (N.T.) dated December 31, 2013 w.e.f. 1st day of March, 2014 but the same was Recinded vide Notification No. 07/2014 – Central Excise (N.T.) dated 26th February, 2014
32. Substituted vide Notification No. 18 /2013-Central Excise (N.T.) dated December 31, 2013 w.e.f. 1st day of March, 2014 but the same was Recinded vide Notification No. 07/2014 – Central Excise (N.T.) dated 26th February, 2014
33. Inserted vide Notification No. 21/2014-Central Excise (N.T.) dated 11th July, 2014 w.e.f. 11th day of July, 2014.
34. Inserted vide Not. 02/2016 – Dated 3-2-2016.
35. Substituted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016, before it was read as, “heading 6804”.
36. Omitted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016, before it was read as,  “but does not include any equipment or appliance used in an office”
37. Inserted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016
38. Substituted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st March, 2016, before it was read as,  “but shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994
39. Inserted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016
40. Substituted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016, before it was read as, “output service”.
41. Inserted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016
42. Substituted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016, before it was read as,

“(C) capital goods except when used as parts or components in the manufacture of a final product;”

43. Inserted vide Not. 13/2016 – Dated 1-3-2016,  w.e.f. 1st day of April, 2016