100% Cenvat credit on Cap Goods

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Shankar (Querist)
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26 September 2010 We are Excisable manufacturing unit. I want to update my knowledge about Cenvat on Cap Inputs. Can we take 100% duty at the time of purchase cap goods? I came to know that from FY 10-11 we can avail 100% duty on cap purchases.
Pl reply.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 September 2010 CENVAT on Capital goods can be taken 50% in current year and 50 % in next year

Shankar

Shankar (Querist)
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26 September 2010 Dear Ramesh,

Thanks for the prompt reply.
Is it sure that there is no 100% availlment of excise duty on cap purchases. pl confirm.

thanks

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 September 2010 Only exception in case of Addtional customs duty paid u/s.3(5) of customs tarrif act(Special CVD), full 100% cenvat available in the first year itself

no other case having 100% cenvat in first year

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Ram Avtar Singh

Ram Avtar Singh (Expert)
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26 September 2010 Credit of duty paid on capital goods – Capital goods (machinery, plant, spare parts of machinery, tools, dies, etc.) as defined in rule 2(a), used for manufacture of final product and/or used for providing output taxable service will be available. Capital goods should be used in the factory. 50% credit is available in current year and balance in subsequent financial year or years [rule 4(2)(a) of Cenvat Credit Rules]. Assessee should not claim depreciation on duty portion on which he has availed Cenvat credit [rule 4(4) of Cenvat Credit Rules].

Ram Avtar Singh

Ram Avtar Singh (Expert)
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26 September 2010 Additional Customs Duty paid u/s 3(5) of Customs Tariff Act. This duty on imports is payable under clause 72 of Finance Bill, 2005 w.e.f. 1-3-2005. This credit will not be available to service providers, as provided in second proviso to rule 5 of Cenvat Credit Rules. Proviso to rule 4(2)(a) of Cenvat Credit Rules makes it clear that even if the goods on which this duty is paid are ‘capital goods’, full 100% credit will be available in first year itself [This duty is payable @ 4% on imports of ITA (Information technology Agreement) bound items and on specified inputs/raw materials, for manufacture of electronic/information technology items, which are exempt from customs duty. This duty is not levied on information technology software].

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