Cenvat Credit

[Rizwan Ullah]

Assessee purchased certain machinery classified as capital goods falling under Ch- 84 , due to some reason assessee could not take cenvat credit on that invoice issued in 2014. Is Assessee eligible for taking cenvat credit on such invoice in 2016.?

[DR.MARIAPPAN GOVINDARAJAN]

The Rule provides that 50% of credit should only be taken in the FY during which the capital goods is purchased and the remaining 50% to be taken after that FY. If 50% credit has not been taken in the first you can take 100% in 2016.

[Rajagopalan Ranganathan]

Sir,

With effect from 1.3.2015 third proviso to rule 4(1) of Cenvat Credit Rules, 2004 "the manufacturer or the provider of output service shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub- rule (1) of rule 9.According to your qwery, you received the capital goods in 2014. Up to 1.3.2015 there was no time limit for taking credit and you can take 50% of the in the year in which you have received the capital goods. Remaining 50% can be take during any of the years that follows the year 2014. Since more thane one year has elapsed when you intend to take the first credit of 50% in 2016 in my opinion, you are not eligible to take the credit. Even if you take it audit will object it.

[Ganeshan Kalyani]

The Cenvat paid on purchses is an eligible credit . The time limit within which the credit should be taken is prescribed to bring discipline amoung the assessee to do correct compliance . Though the issue is litigation prone, an assessee should avail the credit if the credit involved is substantial . Thanks .

[Suryanarayana Sathineni]

Dear Friend,

In my view, the balance 50% credit can be taken in subsequent financial years and not in subsequent financial year. Hence, you can avail the balance 50% credit even now without any doubt,

However, for the first 50% of the credit , which is supposed to be availed by you in the year of receipt but not availed for the reasons best known to you, can be taken since it is your legitimate right as already stated by Shri. Ganesh Kalyani Ji, I suggest you to take the same under intimation to the Department giving the background as an abundant caution to avoid any further litigation in this regard.

Best Regards,

Suryanarayana

[VAMSI KRISHNA]

Dear All,

The limit of one year to take CENVAT credit is applicable to only inputs or it apllies to capital goods. To the best of my knowledge third proviso to rule 4(1) of Cenvat Credit Rules, 2004 is applicable only to inputs and this limit not applies to both 'input services' and 'capital goods'.

Please clarify my doubt.

In this issue i agree with the views directed by Suryanarayana Sathineni sir.

Thanks in advance to All

[Ganeshan Kalyani]

The Provision states that the Cenvat credit on capital goods purchase should be taken to the extent of 50% of the credit in the same financial year and balance would be available in subsequent years. Hence, it is implied that the credit on capital goods should be taken within one year from the date of purchase of capital goods. Thanks

AI Summary

Cenvat Credit on 2014 Machinery: Rule Change in 2015 Limits 2016 Claims, Debates on Capital Goods Continue. An individual inquired about the eligibility to claim Cenvat credit on machinery purchased in 2014, seeking to take the credit in 2016. Responses varied: one suggested that 50% of the credit should be taken in the year of purchase, with the remainder available in subsequent years. Another noted a rule change effective March 1, 2015, imposing a one-year limit for claiming credit, arguing that the claim in 2016 would not be valid. Others debated whether this time limit applied to capital goods, with some advising caution and communication with the tax department to avoid disputes.