Cenvat Credit and Depriciation

[Mehul Pandya]

Sir,

My query is regarding capital goods cenvat and Depreciation calculation.

For example I am buying one capital goods of ₹ 1000/- + ₹ 15 Excise Duty.

Hence Can I avail cenvat credit of ₹ 7.5 in the current year and balance in the next year as far as CCR,2004 concerns whereas I will claim depreciation only on ₹ 1000/- i.e. excluding duty amount. Is this allowable from the both IT and CCR Rules.

[Mahir S]

Sir,

Depreciation under I.Tax is availed on the capital goods value excluding the excise duty portion credit, on which capital goods cenvat credit is availed.

[Mehul Pandya]

Thank you for your reply,

It means I can take benefit of Cenvat Credit and Depreciation as per above mentioned example.

Can you please suggest any notification,circular or case laws favoring the same.

[Rajesh Nathoo]

Dear Mehul ,

It is allowed both under IT and CCR Rules , Go through sub Rule 4 of Rule 6 of CCR Rules .

[Mahir S]

Yes Sir, you can avail the benefit of cenvat credit and depreciation as per your above mentioned example.

You may also refer to sub rule 4 of rule 4 of Cenvat Credit rules, 2004.

AI Summary

Cenvat credit may be availed while depreciation is claimed on the capital cost excluding the duty portion under CCR rules.
Cenvat credit on the excise duty component of a capital good may be availed under the Cenvat Credit Rules, 2004 while depreciation for income tax purposes is computed on the capital good's value excluding the excise duty portion on which cenvat credit is taken; respondents cite sub rule 4 of the Cenvat Credit Rules in support.