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Cenvat credit

jim (abc) (309 Points)

04 November 2011

Hi.

Under which circumstances is CENVAT credit on capital goods not available?

Thanks in advance...

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12 Replies

kishore (asst manager -accts) (135 Points)
Replied 04 November 2011

cenvat credit on capital goods not used for manufacturing cannot be claimed , correct me if wrong

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 November 2011

Originally posted by : jim
	Hi. Under which circumstances is CENVAT credit on capital goods not available? Thanks in advance...

cenvat credit on capital goods can not be claimed if ...........

1) final products / services are exempt

2) such capital goods are cleared with products

3) such capital goods are removed from the registereed premises.

Kunal (Risk Analyst) (299 Points)
Replied 05 November 2011

Dear Kishore Use for manufacturing is not required for claiming cenvat credit...mere use at the place of manufacturing for any purpose shall entitle claiming of cenvat credit. Cenvat credit is not available if.. 1)if its removed from factory AS SUCH. 2)it its used in manufacturing of exempted goods. 3)if it is used at d place of office inside d factory for office works. 4)if it has been written off partially of fully or any provision has been made in d books of account for d same den d cenvat credit needs to be reversed.

1 Like

vishnu (job) (75 Points)
Replied 05 November 2011

cenvat credit on capital goods can not availed if you are manfacturing and clearing the exempted goods or exempted service and if you are in the ambit of SSI.

CS Bijoy (Expert) (6394 Points)
Replied 05 November 2011

cenvat credit on capital goods can not availed if you are manfacturing and clearing the exempted goods or exempted service and if you are in the ambit of SSI.

Agreed with.......

CA,CMA,CS Karan Gogia (Employed) (230 Points)
Replied 06 November 2011

Agree with roopka....however some correction are as follows

Dear Kishore Use for manufacturing is not required for claiming cenvat credit...mere use at the place of manufacturing for any purpose shall entitle claiming of cenvat credit. Cenvat credit is not available if.. 1)if its removed from factory AS SUCH. 2)it its used in manufacturing of exempted goods. 3)if it is used at d place of office inside d factory---- . 4)if it has been written off partially of fully or any provision has been made in d books of account for d same den d cenvat credit needs to be reversed.

NEERAJ KUMAR (ASST. MANAGER) (31 Points)
Replied 06 November 2011

(1) The CENVAT credit in respect of capital goods shall not be allowed in respect of that part of the value of capital goods which represents the amount of duty on such capital goods, which the manufacturer or provider of output service claims as depreciation under section 32 of the Income-tax Act, 1961( 43 of 1961).

(2) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to a job worker for the production of goods on his behalf and according to his specifications.

(3) Dear all please refer the definition of Capital goods as per section 2 (a) of CCR, 2004 as under:

(a) “capital goods” means:—

(A) the following goods, namely:—

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, ¹ [heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804] 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; and

(vii) storage tank,

used—

(1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or

(2) for providing output service,

From the definition it’s quite clear that capital goods have to be used for providing output service whether directly or indirectly. When the capital goods are not at all used for providing output service then how can we use the credit of the same?

2 Like

CA,CMA,CS Karan Gogia (Employed) (230 Points)
Replied 07 November 2011

@ neeraj kumar....very nicely explained........thanx

jim (abc) (309 Points)
Replied 08 November 2011

Thanks Friends,

Really Appreciate Your Efforts...

SANDEEP KUMAR GUPTA (Manager) (23 Points)
Replied 10 November 2011

hi,

I m agreed with the view of CA Karan Gogia,

Thanx

Sandeep Gupta

Manoj Kumar (Advocate) (36 Points)
Replied 18 November 2011

I have taken full credit on capital goods i.e. Refractories & C.I. Moulds. Is there any provision to charge interest & penality. I think these are not covered to take 50% cenvat credit.