Availability of cenvat credit on imported capital goods not yet received at factory.

[G GOSWAMI]

We are the manufacturer of engineering goods since long  now under BIFR. We are importing a machine in addition to our existing machines. The machine has already been shipped. But now the machine could not be entered  in our factory since the shed for it is under construction. we have decided to keep the said machine in a rented godown after its arrival at Calcutta Port and getting  Customs clearance with payment of cvd & 4% adl. etc. Kindly advise with relevant provision whether we can avail 50% cenvat credit immediately on the issuance of Bill of Entry/payment of duty though the machine will be kept in the rented godown for time being instead of our factory. I remember that there are some CESTAT judgement where cenvat credit has been allowed for the inputs are in high-seas/in-transit though actually not received in the factory.  Your valuable opinion will be highly solicited.

Regards,

G.GOSWAMI

29.6.2013 

[YAGAY andSUN]

Rule 4 (2) (a) of the Cenvat Credit Rule, 2004 does not allow the CENVAT credit on the capital goods which has not been received in the Factory premises.

[G GOSWAMI]

Thanks to Mr. khatriji for his immediate response.

Regards,

G.Goswami

AI Summary

CENVAT Credit Denied for Capital Goods Not at Factory: Rule 4(2)(a) of Cenvat Credit Rule 2004 Explained A manufacturer of engineering goods, currently under BIFR, inquired about the availability of CENVAT credit for a machine imported but not yet received at their factory due to ongoing construction. The machine will be stored in a rented godown after customs clearance. They sought advice on whether they could claim 50% CENVAT credit upon issuance of the Bill of Entry and duty payment. A respondent clarified that under Rule 4 (2) (a) of the Cenvat Credit Rule, 2004, CENVAT credit is not permissible for capital goods not received at the factory premises.