CENVAT CREDIT OF DUTY PAID ON CAPITAL GOODS BEFORE EXCISE REGISTRATION

[Guest]

Dear Sir,

We are in process of setting up a new unit but we have still not applied for CE Registration. We are purchasing lot of capital goods involving crores of duty . Can you specifically and categorically advise without citing any case law but citing CCR , 2004, that whether cenvat credit of excise duty paid on purchase of these capital goods which are expected to reach at new unit before obtaining Central Excise Registration, can be availed after getting CE Registration.

Thanks & Regards,

PRADEEP GARG

08979000859

[Guest]

Dear Pradeep,

In my opinion,

No where it is mentioned that cenvat credit on goods purchased before registration shall not be available. If all condition of CCR-2004 is fulfilled i.e eligible capital goods , 50 % credit in a subsequent F.Y., Credit taken within One year from the date of Invoice then will be no ground to avail Cenvat Credit. Just as date of Invoice is prior to date of R.C. can not be ground for denying Cenva Credit. Cenvat Cr. is a matter of right.

[YAGAY andSUN]

There are plethora of judgment in this regards. JR Herbal Care vs. CCE 2010 253 ELT 321 (CESTAT SMB) = 2010 (3) TMI 391 - CESTAT, NEW DELHI  You can avail the CENVAT credit on capital goods received in initial stages.

[Ganeshan Kalyani]

If there is an expansion to the existing plant which has got central excise registration and plant and machinery are purchased. whether the cenvat credit can be denied only because the certificate is amended after the plant and machinery are installed. Or should we need to update the certificate before the assets are purchased. ?

[Mahir S]

Mr. Pradeep ji,,

If you do not want to avail the cenvat credit on capital goods, then you can instead claim Depreciation thereon under section 32 of the Income Tax Act, 1961. Refer sub rule (4) of rule (4) of the Cenvat Credit Rules, 2004.

Secondly, if the capital goods are imported goods and not initially required for setting up of the plant; then the said goods can be Warehoused and thereafter cleared on payment of duty to your factory premises, after completion of excise registration formalities.

What do you say, Sir..

[KASTURI SETHI]

There have been only two basic requirements for availment of cenvat credit since the inception of Modvat (Cenvat) Credit facility. These are :

1. Inputs or capital goods should be duty paid.

2. These must be utilized in or in relation to the manufacture of final dutiable product.

There is no explicit provision to allow credit before registration. Since law is silent on this issue, you will have to take shelter of case laws. However, it is pertinent to mention that the AG (Audit) used to raise lame objection for dis-allowing credit on the cenvatable invoices received before registration but none was sustained in any court. After all cenvat credit is to be used after registration. So go ahead tension-free.

[DR.MARIAPPAN GOVINDARAJAN]

Thanks for a detailed discussion in this regard.

[KASTURI SETHI]

Sh.MARIAPPAN GOVINDARAJAN JI,

I also warmly reciprocate the same. I also cherish your articles and replies to questions. No hesitant to say I learn from you also on this forum.

AI Summary

Cenvat credit on capital goods may be availed after registration if CCR conditions are satisfied and temporal rules met. Cenvat credit on capital goods invoiced before obtaining Central Excise registration may be availed after registration if the Cenvat Credit Rules, 2004 conditions are fulfilled: goods are duty paid, qualify as eligible capital goods, are used in relation to manufacture of dutiable goods, and temporal conditions for taking credit relative to the invoice date are observed.