cenvat credit of capital goods

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2010 Dear sir,
we are service providing company.
we purchased computers under excise invoice and it is useing only in HR AND FINANCE departmens. not useing directly in providing output service.
can we eligible to utilise excise duty paid on capital goods aginst output service tax.

Tilak Agrawal

Tilak Agrawal (Expert)
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11 November 2010 Dear Student

In my Opinion you will not be eligible for taking CCR of excise duty paid on Capital goods as it can be claimed only by manufacturer.

CA.Madhusudan B.P.

CA.Madhusudan B.P. (Expert)
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11 November 2010 pl refer Rule 6(4) of Cenvat Creidit Rules.
It is reproduced for your information.

(4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year.

When you say the Computers are being used in HR & Finance function exclusively, you may not get the input credit on Capital goods. There are various decided cases in favour of the department.

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2010 sir we are not providing any HR AND FINANCE SERIVICES to any outsiders. these are support functions to our main services which is consulting engineering,technical inspection and cetification.then there is no question of exempted services here.
As per rule 4(2)(a) of the cenvat credit rules 2004 excise duty paid on capital goods can be utilized as input credit for the payment of output service tax.
further it was given in the capital goods defintion that, capital goods used for providing out put service can take cenvat credit.
here used means whether directly or indirectly.

please kindly clarify the same

Querist : Anonymous

Querist : Anonymous (Querist)

CA.Madhusudan B.P.

CA.Madhusudan B.P. (Expert)
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11 November 2010 Venkat,
When you say the computers are being used in HR &Finance & not useing directly in providing output service, THIS ITSELF SHOWS THAT YOU ARE NOT ELIGIBLE TO GET CENVAT CREDIT.
When you say "we purchased computers under excise invoice and it is useing only in HR AND FINANCE departmens. not useing directly in providing output service" What does it mean? It is not used in providing TAXABLE OUTPUT SERVICE ISN'T?

In case of a manufacturer, even if the capital goods are used partly for excisable finished goods, Credit is available, Whereas in case of Service provider, the capital goods should used FOR PROVIDING OUTPUT SERVICE.

Even if you proceed to avail the input credit, there are few restriction like 50% is only abailable in the year of purchse, Depreciation is not allowed in respect of duty amount etc.,