CAPITAL GOODS SEIZED BY FINANCE COMPANY-CENVAT CREDIT

[MANDAVILLI RAMAKRISHNA]

Dear Experts,

My client ( A )  purchased    stone crusher and installed by taking cenvat invoice from

the manufacturer ( B ) . but before starting production, the finance co. ( C ) seized the machinery and sold to third party ( D ) who in turn given the machinery

on rent basis to fourth party ( E ) Please advise who is eligible to take credit of the cenvat paid and against which documents and whether the D can set off his service tax liability for renting the tangible goods to E.

Kindly advise with deep concern as the  A party is in severe financial crunch and the tax bore by him if get back as refund it will be greatest help to him.

Regards

RK

 

AI Summary

Cenvat credit entitlement depends on transaction facts; transferee cannot claim credit without a proper excise invoice.
Entitlement to Cenvat credit after a finance company seizes and sells capital goods depends on whether the goods were financed or offered as collateral and on timing; a subsequent purchaser is unlikely to obtain credit if the transferor did not issue a proper excise invoice or is not a registered excise dealer, so documentary compliance governs eligibility to claim credit or set off input service credit.