Newly inserted Rule 6(4) of CCR 2004 (wef 01-04-2016) provides for 'Non Availability' of Cenvat Credit on Capital Goods 'Exclusively used in manufacture of exempted products / providing exempted services' for a period of 2 Years (& further some conditions / provisions).
My view is that such provision was already there where Cenvat Credit on Capital Goods exclusively used in exempted goods / services was disallowed but where such manufacture was of exempted & dutiable goods / provision of exempted & dutiable services, it was allowed.
Kindly share your views in short what exactly the new provision wants to provide / what is new & different from earlier provision.
New Rule 6(4) of CCR 2004 Limits Cenvat Credit on Capital Goods for Exempted Goods/Services for Two Years Rule 6(4) of CCR 2004, effective from April 1, 2016, restricts Cenvat Credit on capital goods used exclusively for manufacturing exempted goods or providing exempted services for two years. Previously, credit was disallowed for exclusive use in exempted activities, but allowed when used for both exempted and dutiable activities. The new rule specifies a two-year period from the start of commercial production or service provision, after which credit may be allowed if activities become dutiable. The amendment clarifies usage conditions but partially limits the Delhi Tribunal's prior interpretation, which allowed credit for sequential use in dutiable and exempted activities. (AI Summary)
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