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Cenvat credit on construction of factory

01 December 2011

If a company has constructing a new factory, and it has another factory where excisable goods where produced, whether the company is allowed to claim cenvat on machineries which are installed in the new factory and the production is about to commence only in next financial year..

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8 Replies

Mohit Jangid (Article) (141 Points)
Replied 01 December 2011

allowed only when separate registration of new company is taken under central excise act

1 Like

sanjiv (Admin) (96 Points)
Replied 02 December 2011

Santosh, clarify

1.wheather these two units have two different Excise Registration number,

2.are they shiftiing from one premises to another?

Refer to Cenvat credit rule 10 , if Condition 2 is true...

1 Like

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 03 December 2011

Under excise each factory shall be separately registered. You can take cenvat credit of machinery in new factory. But it can be utilsed for payment of duty after commencement of production.

1 Like

HS Negi (Senior Executive- F&A) (590 Points)
Replied 03 December 2011

Dear Santsoh

Please intimate to excise deptt that you are going to install a new factory in which you are procuring the capital goods for its set up. After registration, you will be liable to avail the excise cenvat .

Best Regards

HS Negi

1 Like

CA Prabhat Gupta (Manager (Indirect Taxes)) (821 Points)
Replied 05 December 2011

Dear Mr. Santosh,

I am dealing with a similar case, where a new plant has been set up and now during an Excise Audit by Excise Department the Eligibility of Cenvat Credit on Capital Goods purchased before Excise Registration has been questioned.

To avoid such circumstances you must intimate the Central Excise Department in writing about the plant under construction and the fact that you intend to take Cenvat Credit on Eligible Capital Goods once the plant starts to manufacture goods. You must keep invoices, plans etc. relating to Capital goods ready for reference in future and to satisfy Excise Department.

Another alternative is that you can obtain Excise registration and start filing NIL return showing Cenvat Credit availed on Capital Goods. Though this is not specifially required under the provisions of the Act.

1 Like

shrivardhan (Audit Assistant) (45 Points)
Replied 23 August 2012

we are constructed factory building ,it is our unit II .we have paid around 9.00 lakh for Service tax

Now

When we can claim CENVAT ,after geting reg.for unit II or under existing unit?

Is there any abetement?

That constuction bill have date of March 2011 ,but we yet to get regeistred for exsice for unit II ,when we can avail CENVAT Credit?

Should i capitalied the amount?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 23 August 2012

construction is neither input nor capital goods, so no input credit

you have to register your unit 2 with excise and service tax, and only when you start paying duty or service tax, you will get eligible for input credit availed from that very day.

1 Like