Cenavt Credit on previous Capital goods

[Laxmaiah Vanamamula]

Sir,

We have a manufacturing unit, we purchased one machinery under chapter ID 84, in the year 2012, at that time we have no Registration under central excise,

query > we take Central excise registration in 2013, now the question is can we availed cenvat credit on above capital goods/ mchinery.

please suggest me.

Thanking you,

V.Laxmaiah

[Mahir S]

Yes sir,

You can avail cenvat credit on the said capital goods/machinery now.

[DR.MARIAPPAN GOVINDARAJAN]

Yes, I agree with the views of Sri S. Mahir.

[YAGAY and SUN]

Dear V Laxmaiah,

Provided you had not capitalized the excise duty along with the value of machinery at that material time i.e. in the year 2012 and availed the depreciation on the gross value of the machinery under Section 32 of the Income Tax Act, 1961. If so then you cannot avail the CENVAT credit on Capital goods since the returns under Income Tax had been duly submitted by you.

Please be aware of the above provisions also before claiming the CENVAT credit now.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ganeshan Kalyani]

The objective of revenue behind such provision is that either depreciation can be claimed on cenvat element or input capital cenvat credit can be availed. Both cannot happen at a time. This exercise is a part of Tax audit report u/s 44AB of the Income Tax Act, 1961.

AI Summary

Cenvat credit on capital goods allowed if excise duty not capitalised and depreciation not claimed under income tax
CENVAT credit on capital goods acquired before excise registration may be claimed after registration provided the excise duty was not capitalised into the machinery's cost and depreciation was not claimed on that gross value in the income tax returns; if duty was capitalised and depreciation claimed, CENVAT credit cannot be availed, to avoid double benefit, a matter reviewed in tax audits.