SAD on Capital Goods

[Sharad Sonawane]

Dear Sir,

 

We have Purchased Capital Goods from First Dealer / Second Stage Dealer he shown SAD on his Invoice can we take Full Credit on SAD or 50 percent any notification on full credit SAD

[GANTI SARMA]

You can utilise 50 percent only even you taken 100 percent in books.

[Guest]

You can avail 100 percent credit of SAD and use the same for payment of excise duty. SAD is nothing but in lieu of sales tax.

[Guest]

To elaborate further on eligibility of 100 percent credit immediately on receipt of capital goods imported:-

as per the proviso 2 of the rule 4(2)(a) of Cenvat Credit Rules the cenvat credit of additional duty leviable under sub-section (5) of section 3 of the Customs Act, in respect of capital goods shall be allowed immediately on the receipt of the capital goods in the factory of the manufacturer.

AI Summary

SAD credit: full credit for capital goods allowed immediately under Cenvat rules, though administrative views conflict. The dispute concerns entitlement to cenvat credit of the additional duty in lieu of sales tax (SAD) on capital goods. Administrative opinions differ: one advises only partial credit, while others rely on the proviso to rule 4(2)(a) of the Cenvat Credit Rules to allow immediate cenvat credit of the additional duty on capital goods upon receipt in the factory, permitting full use of that credit against excise liability subject to Cenvat conditions.