Cenvat on Marchinery sold in same financial year

[Krishan Gopal]

Dear Sir,

Please advise we have purchase machinery in Aug.2013 (as per rule 4(2)(a) we have claimed only 50 percent of CVD) and sold in March 2014 (as per rule 3(5A) we have reversed 92.5 percent of CVD i.e. 100-2.5*3qtr)Is it mandatory balance 50 percent CVD must be claimed in March 2014 or we can claim in April 2014 due toexcess cenvat in our books

Regards,

K. Gopal

[YAGAY andSUN]

Dear Krishan Gopal,

You may avail the CENVAT credit up-to 100 percent and after deducting the depreciation at the rate of 2.5 percent per quarter you may reverse the CENVAT credit.  For details please check the CENVAT credit Rules in this regard.

Thanks,

Team YAGAY & SUN

(Indirect Tax Consultants)

[PAWAN KUMAR]

Dear Krishan Ji,

There is one option which is more satisfactory . First claim the remaining 50 percent cenvat in March'2014 after that worked out the liability as per rule 3(5)(A)  at the rate of 2.5 per quarter, less it from the total cenvat taken by you. 

AI Summary

CENVAT credit timing: claim remaining credit on sale and then compute reversal based on depreciation adjustment. Taxpayer may avail the full CENVAT credit on machinery and then compute and reverse the reversal liability by applying the prescribed quarterly depreciation adjustment to the total credit taken; a practical approach is to claim any remaining credit in the month of sale and then reduce the computed reversal from the total CENVAT availed in that period.