cenvat on capital goods by unit availing ssi exemption

[Priyesh Agrawal]

Dear Sir,

 

A unit is availing benefit of ssi exmeption for year however the receipts crossed 10 lakhs limit in dec. Can he avail cenvat on capital goods which was purchased in the month of May....according to my concept he can avail 100 percent cenvat in year of purchase only after he starts charging Service Tax... 

 

Thanks & Regards

AI Summary

Cenvat credit on capital goods: service providers generally get only partial credit in year of receipt unless exemption applies.
Rule 4(2)(a) allows only fifty per cent of CENVAT credit on capital goods in the financial year of receipt, with the balance in subsequent years, but provides full-year credit where capital goods are cleared as such in the same year or where an assessee is eligible for an exemption based on the value of clearances. The rule's reference to "clearances of all excisable goods" limits the exemption-based eligibility to situations tied to excisable goods, so service providers availing small service provider exemption are not eligible for full credit in the year of purchase and must take only fifty per cent that year and the balance later.