06 June 2012
if we want to take cenvat credit in two years of a capital item, then is it necessary to capitalize the same or can we treat as repair & maintt. expenses?
11 June 2012
You need to ascertain whether the item purchased by you falls within the definition of Capital Goods or not as defined under Cenvat Credit Rules, 2004. If the item purchased falls in that category,then you can take cevat credit upto 50% of duty paid in the year of purchase and balance in next year. If you decide to take cenvat credit say 50% in the year of purchase and balance 50% next year, in the year of purchase you need to book the cost net of 100% cenvat either as revenue item or as an asset depending upon the nature of item. Cenvat or Excise provisions do not restrict you on treating it as capital goods or as a revenue item from accounting point of view. This will be decided by applying pure accounting methodology for recognition of transaction in books of accounts.
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