regarding availment of cenvat credit on capital goods

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binalshah

manager finance

21 Points Posted on 04 November 2009

I am CA Binal Sheth from Surat.

Case: Whether cenvat credit can be availed of CVD, etc paid on machinery imported under EPCG and cleared from 1^st company in BADDI to another company in DAMAN after full payment of saved custom duty, CVD, etc on surrender of EPCG license.?

Further details,

Ø The company in Baddi has imported the machinery two years before and now it wants to transfer the same to another company in DAMAN. So whether sub rule (5) of rule (3) of cenvat credit rules, 2004 would apply to other company in Daman?

Ø The 1^st company in Baddi has obtained registration under excise recently whereas it has imported the machine 2 years before so can it now prepare excisable invoice under rule 9 and if so, what about excise component in the invoice?

Ø Also since the company has imported the machine earlier can the company endorse the bill of entry now?

Ø The 1^st company in Baddi has not availed any cenvat credit on said capital goods on purchase of said machinery, so can it pass on the cenvat credit to Purchaser Company in Daman? If so on what grounds..?

Waiting for your response.

Replies (3)

sivaram

Asst Mgr-Taxation

5764 Points Posted on 04 November 2009

Mr Binal shah i request you to post in expert section to get reply immediately

Umesh V Naig

Statutory Analyst

387 Points Posted on 07 November 2009

Central Excise duty obligation is on the manufactured product x hence the old machine on which no excise / CVD availed cannot be charged with excise duty x however document accompanying the consignment must inform the details of earlier purchase details with remark of No Cenvat duty availed

chamatkaribaba

Practicing Indirect Tax

107 Points Posted on 20 February 2010

Dear Binal, Second Company can not take cenvat credit of CVD as only the importers whose name is on bill of entry can avail cenvat credit. I understand that the first company's name is on bill of entry when goods were cleared from customs.

Earlier, there was a provision that endorsement of bill of entry in another person's name used to entitle second person to avail cenvat credit. Now, there is no provision like that. It is industry's demand that this provision should be restored in Budget 2010-11. Let's see if Pranab Babu is listening.

Even otherwise, you have not paid customs duty at the time of clearance and you are not selling goods as manufacturer to another company, payment of duty forgone will not be enough to avail cenvat credit.