Cenvat Credit on Capital Goods

This query is : Resolved

ahmeshere (Querist)
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17 October 2010 Dear Experts,
As per Rule 4(2)(a) of Cenvat Credit Rules 2004:
"The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding 50% of the duty PAID on such capital goods in the same financial year"

Cenvat Credit of 50% in the year of receipt and balance in subsequent year(s) -- is a known concept.

Query: Does the use of the word "paid" mean that credit will be allowed only on payment of duty. If credit is allowed even without payment then why has the word "paid" been used?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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18 October 2010 Paid includes payable. The point maybe that in normal course we expect the same to be paid. [ september goods removed paymentmade in October] The drafting of the IDT law has 100s or lacunae that way. We have to look at the intention if possible and go ahead.

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BALU V

BALU V (Expert)
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18 October 2010 I presume the usage of word 'paid" is a pre-cautionery measure in order to recover the credit which has been availed by the user if the manufacturer has failed to pay the dues to the govt. It is my personal view only. Is there any other views?

CA Amit Joshi

CA Amit Joshi (Expert)
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18 October 2010 Agree with Madhukar N Hiregange Ji

Ambadas

Ambadas (Expert)
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18 October 2010 Once the excise invoice is made duty liability gets generated which has to discharged by the due date. It is presumed that duties shown on the excise invoice is paid. Hence the term duty PAID relates to duty amount shown on the excise invoice (duplicate for transporter's copy).

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