Condition to cenvat credit on capital goods

1728 views 3 replies

kumar hattanna

Officer - Excise

525 Points Joined July 2013

Dear Experts

Please explain me the below mentioned condtion to claim cenvat credit on capital goods with exmple of value.

Your valuable reply highly appriciated.

(D) Conditions for availment of credit on capital goods. CENVAT Credit Rules also provide certain conditions for availment of credit on capital goods. These are:

(i) The CENVAT Credit in respect of capital goods shall not be allowed on that part of the value of capital goods, which represents the amount of duty on such capital goods which the manufacturer claims as depreciation under section 32 of the Income-tax Act.

Please explain me.

Regards

Kumar

Replies (3)

kumar hattanna

Officer - Excise

525 Points Joined July 2013

Dear Arun Kumar Sir

Please explain me the above condition with example of value.

Regards

Kumar

CA LOVELY ARORA

C.A. B.Com (H) Graduate

2151 Points Joined August 2008

Dear Kumar,

yes, the condition is absolutely fit.

It says that you can claim either CENVAT credit on that part of capital goods or Depreciation u/s 32.... not both.. the same thing has been written in Income Tax Act also. EMPHASIS SHOULD BE MADE ON THE PART OF THE VALUE OF THE CAPITAL GOODS.....

let's take an example:- you purchased the capital goods of Rs. 1 lakh and E.D. imposed on it was Rs. 10000... so, it amounts to Rs. 110000.
Now, if the final product you are producing is dutiable, then take IT Dep. on Rs. 1 lakh and CCR on rem. 10000...
and if final product is not dutiable (as in normal cases) then take IT dept. on 110000....

Thanks and regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
+91-9891400405

Ravi Bala

Manager Accounts

21 Points Joined May 2013

Hi, I have an query that an SSI not registered under Excise but registered under Service Tax can claim CENVAT on Capital Goods? If so, what is the process to avail this benefit?

Please help me to understand.

Regards,

Ravi Bala

ravib @ zentronlabs.com