CENVAT Credit on input used for New Product development Department

[Pradeep Jain]

Sir,

We are having new product development department , where in inputs purchased  consumed for , different trial testing and innovation purpose , we do captalised the input cost incurred  on this account.

The said product developed may be  introduced in to the market within 1-2 year.

Now querry is that:-

Are we entitled to avail CENVAT credit on the purchase of inputs used for the future development of new product. ?

Regards

 

Pradeep Jain

 

[Vijay Chitte]

Yes, you can take cenvat credit immidiately, Beaing as a manufcturer, no need to wait when product is introduced, Further, only inputs (goods) used for providing taxable services eligible, Cenvat credit reversal is required even if the input goods are written off fully or partially in books of account.

[YAGAY and SUN]

Research and Development forms part and parcel of manufacturing, hence, it is verly well incorporated in the definition of inputs under Cenvat Credit Rule, 2004

AI Summary

CENVAT credit entitlement: immediate credit allowed on inputs used in new product development, subject to reversal rules.
Manufacturers may claim CENVAT credit immediately on inputs consumed in research, trial testing and new product development without awaiting market introduction; research and development activities are treated as part of manufacturing under the Cenvat Credit Rules, 2004. A credit reversal obligation applies where inputs are used for providing non eligible purposes or written off fully or partially in the books of account.