CENVAT CREDIT ON CAPITAL GOODS -

[SANJEEV JADHAV]

Dear Sir,

We are manufacturer of Castings falling under chapter 73 of Central Excise Tariff Act 1985. Recently their is change in definition of Input. i.e. Input includes capital goods having value less than ₹ 10000/- Per Pc. Here wording is Per Piece. But some of capital goods we are getting on per Kgs. basis.

For example Refractory material falling under chapter 38160000 is getting to us on per Kg. basis. We have one purchase invoice, total Value of refractory material including Tax is ₹ 761940/- and total Kg. is 8000. Please confirm where we can take credit of Refractory material. I.e. In Input or Capital goods.

[KASTURI SETHI]

Dear Sh.Sanjeev Jadhav Ji,

In such a situation, better option is to take credit as Capital Goods. You will be in a comfort zone for all purposes i.e. accounting in books of accounts, audit purpose.

[Ganeshan Kalyani]

Sir, the amount is more than 10 thousand in your query. so it should be taken as capital goods. 50% of credit is eligible in the year of purchase and balance in next year i.e. on 01.04.2017 you can take the credit.

[KASTURI SETHI]

Sh.Sanjeev Jadhav Ji,

Rightly explained by Sh.Ganeshan Kalyani, Sir and hence agreed with his views along with further clarification.

[SANJEEV JADHAV]

Dear Sirs,

Thanks you for your suggestions.

AI Summary

Classification of capital goods: treat high-value refractory supplies as capital goods and stagger CENVAT credit claims. The document advises that refractory materials invoiced by weight should be classified as capital goods where the aggregate invoice value exceeds the per-piece threshold that determines input treatment; this provides clearer accounting and audit positions. It also states that CENVAT credit for such capital goods must be claimed in a staggered fashion, with part credit in the year of purchase and the remainder in the following year, consistent with capital goods credit apportionment rules.