Availment of cenvat credit of capital goods

[Guest]

Dear Sir,

In Excise notification 21/2014 ce(nt) it is mentioned that time limit for availment of cenvat credit of 6 months is applicable to input (Rule 4(1)) and inputs services (Rule 4(7)) of cenvat credit rules 2004 only, So whether the time limit of 6 months is applicable to capital goods also,please expalin , thanks and regards

[Rajagopalan Ranganathan]

Sir,

Notification No. 21/2014-CE (NT) dated 10.07.2014 inserts new provisos in Rule 4(1) and rule 4(7) of Cenvat Credit Rules, 2004. These two rules talk about taking credit in respect of inputs and input services. Rule 4 (2) talks about taking credit on capital goods. The above proviso prescribing time limit for taking credit is not inserted in rule 4(2). Therefore on capital goods the credit can be taken at any time but on the condition that the said capital goods should be received in the factory of manufacture and 50% of the duty paid on such capital goods can be taken in the first year of receipt and remaining 50% can be taken during any of the subsequent year. Only these two conditions are applicable to capital goods.

[Mahir S]

With due respect, I disagree with the submission/reply made above.

^{As per Excise Notification no. 21/2004 CE NT :-}

[ Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub- rule (1) of rule 9.]

As capital goods invoices/documents on which Cenvat Credit is to be availed also falls under the category of sub-rule (1) of rule 9; therefore the time limit of 6 months for availing credit shall be applicable not only to inputs and input service but also to capital goods.

[Rajagopalan Ranganathan]

Dear Shri. S. Naveed,

It is my opinion that rule 9 (1) of Cenvat Credit Rules. 2004 prescribes the documents on the basis of which credit can be taken. However, rule 4 (1), (2) and (7) prescribes the conditions on the basis of which credit can be taken on inputs, capital goods and input service. Therefore the proviso added to rule 4 (1)  and 4 (7) should have been added to rule 4 (2) also. If it is not done then credit on capital goods can be taken at any time.

[Mahir S]

Yes, the credit on capital goods can be taken at any time during the year provided it is received in factory and 50% of the duty paid is availed in the first year and remaining 50% in subsequent years.

However, it is advisable to make a principle to avail credit on capital goods as soon as possible and also within the time limit of 6 months alongwith input credit and input service credit, so as to avoid any confusion as to whether the 50% capital goods credit has been availed or not in the first/subsequent year; else claim depreciation thereon.

[Mahir S]

Yes, the credit on capital goods can be taken at any time during the year provided it is received in factory and 50% of the duty paid is availed in the first year and remaining 50% in subsequent years.

[PAWAN KUMAR]

Dear Sir,

The Ranganathan sir is right. Cenvat credit on invoice/bill of capital goods purchased can be taken at any time during the year of purchase but a limited of 50% amount. Remaining 50% Cenvat credit can be taken in next year subsequent to year of receipt of capital goods. There is no restriction for capital goods. However as per proviso added to rule 4(1) and rule 4(7) by notification No.21/2014-C.E.(N.T.) dated 11.07.2014 specifically fix the time limit of six month for availment of cenvat credit on inputs and input services. If the manufacturer/output service provider does not avail cenvat credit during six month from the date of invoice of input/input service, cenvat credit would be lapsed.

[Madhukar N Hiregange]

This restriction is Only for inputs and input services.

However for dealers who pass on the credit this restriction may not apply and they can receive the goods back and re invoice the same to enable credit.

[Guest]

Dear Expertz,

pl clarify the below queries;

Due to oversight, few CG invoices of year 2012 n 2013 not availed so far. Shall we take now, they are having eligible chapters.

secondly, in 2012 we have short availed of CC on BE, shall we take leftover amount now or not?

AI Summary

Debate on Six-Month Cenvat Credit Limit: Does it Apply to Capital Goods Under Excise Notification 21/2014? A discussion forum addresses the issue of whether the six-month time limit for availing Cenvat credit, as per Excise Notification 21/2014, applies to capital goods. One participant argues that the time limit applies only to inputs and input services, not capital goods, which can be credited at any time, provided they are received in the factory and 50% of the duty is claimed in the first year. Another participant disagrees, suggesting the six-month limit should also apply to capital goods. The consensus leans towards the non-applicability of the time limit to capital goods, emphasizing compliance with specific conditions for credit eligibility.