Eligibility of CENVAT credit

[VAMSI KRISHNA]

Dear All,

Assessee availed benifit of Notification 1/2011 central excise dated 1/mar/2011

my doubt is 'whether assessee can take CENVAT credit paid on CAPITAL GOODS'??????

In aforesaid notification specifically said that if assessee taken CENVAT on 'inputs and input services' then that assesse is ineligible to avail this benifit. Aforesaid notification is silent about CENVAT on capital goods. please guide me??????

Thanks in advance

[Rajagopalan Ranganathan]

Sir,

If the capital goods are exclusively used for manufacture of excisable goods in respect of which exemption under Notification No. 1/2011 is availed then you cannot avail the credit. If the capital goods are used for manufacture of both exempted and dutiable goods then the credit can be availed.

[Suryanarayana Sathineni]

Dear Friend,

With due respects to the views expressed by Shri.Rajagopalan Ji, I am of the view that the subject Notification does not put any restriction on availment of cenvat credit on Capital Goods since , it talks about restriction on availing credit on inputs and input services.

Further, the subject notification is not an absolute exemption and it is only a conditional exemption and hence the restriction of the credit on capital goods will not apply for availing this notification.

However, as stated by our learned friend, Shri. Rajagopalan Ji, if the said Capital Goods are exclusively used for manufacture of any exempted goods, then you cannot avail such credit before TWO years as per the latest provisions of Cenvat Credit Rules,2004.

Best Regards

Suryanarayana

AI Summary

CENVAT credit on capital goods: available unless capital goods are exclusively used for exempted manufacture, subject to conditions. Whether CENVAT credit on capital goods is barred by the conditional exemption hinges on use. If capital goods are exclusively used to manufacture exempted goods under the notification, credit is not available; if they are used for both exempted and dutiable goods, credit may be availed. An alternative interpretation confines the notification's restriction to inputs and input services and not to capital goods, while acknowledging that exclusive use for exempted manufacture triggers the time-related limitation under the Cenvat Credit Rules.