Cenvat on capital goods

800 views 3 replies

Dingu

Practice

220 Points Joined February 2009

According to Rule3(4) CENVAT is to be paid on CENVAT credit taken on capital goods if such capital goods are removed as such;, if the caoital Goods is scrapped Excise Duty is payable on its transaction value.

Question 1. If the Capital Goods is scapped within one year of receipt, only 50% would have been availed when the manufacturer is not a SSI, what is the position of the reamaining 50% ? Can the remaining 50 % be claimed in the month of scrapping?

Question 2 Are any documents to be maintained to prove it to be scrap?

Replies (3)

Arun Kumar Singh

GST Advocate

15220 Points Joined January 2009

As per rule 3(5B) of cenvat credit rules if inputs or capital goods before being put to use, are written of fully or provision is made in books of account to write off fully, the manufacturer is required to pay an 'amount' equal to cenvat credit taken in respect of such inputs or capital goods.

Ajit kumar Dubey

Taxation Manager

637 Points Joined September 2008

I agree with Mr. Singh, if the capital asset is removed or scraped as such then the amount of duty credit already availed will have to be reversed and the manufacturer has to pay such duty component.

Sanjiv Singh

Deputy Manager

22 Points Joined July 2012

Please Clarify

In case a company has set up a captive power plant and has claimed the entire CENVAT credit on captial goods on the same. Now if the company wishes to add other captive consumers to it by diluting its owership through allocating shares with voting rights will CENVAT credit transferred to the other shareholders? Implications of this.

Now if in case the parent compnay alternatively wishes to declare the power plant a SPV but still mantains the captive status of the plant along with other shareholders will its group captive users qualify for Cenvat credit on capital goods and inputs used for generation of power?

Kinldy treat this as urgent.

Thanks in Advance!