CENVAT CREDIT ON CAPITAL GOODS PURCHASED

[chetan rachhadiya]

WE ARE NOT REGISTERED IN EXCISE BUT WE HAVE PURCHASED CAPITAL GOODS PRIOR 3 YEARS AGO & WE HAVE MENTION "EXCISE DUTY CREDIT" IN BALANCE SHEET & NOT CLAIM DEPRICIATION ON EXCISE PORTION BUT NOW WE INTEND TO APPLY FOR EXCISE REGISTRATION, DOES WE ELIGIBLE TO TAKE CREDIT NOW ?

[MAHESHKUMAR SHARMA]

No, now your are not able to take credit, as at the time of purchase made Input /Capital goods received to you you are not covered under excise.

[Ganeshan Kalyani]

Also the timeperiod within which the credit to be claimed is elapsed.

[chetan rachhadiya]

sir, does this time limit applicable to capital goods because in notification they don't mention capital goods anywhere? secondly we have not taken double benefit of claiming depriciation & cenvat credit simultaneously.

[KASTURI SETHI]

Sh.Chetan Ji,

Pl. read Rule 4 (2) (a) of Cenvat Credit Rules, 2004.

[chetan rachhadiya]

please see issue ID 107027

[KASTURI SETHI]

Sh.Chetan Ji,

The time limitation of one year is not applicable to the Capital Goods to the EXTENT that credit can be taken in two steps i.e. first during the year of purchase of capital goods and balance in the next financial year.. It is nothing else and not more than that. This position existed already prior to the restriction of six months or one year.

[VAMSI KRISHNA]

Dear chetan rachhadiya ji

Let me know why your primises not registered under central excise before 3 years. that is when purchase of capital good. is any reason is there????? or your primises is not required to take registration at the time of purchase of capital good ????

[chetan rachhadiya]

sir, our's is SSI unit that time we don't have any planning to go for excise registration.still our turn over is less than 150 lac but we have planning to purchase excisable capital goods in coming days.

[KASTURI SETHI]

Invoices of capital goods before registration are eligible for credit but these should not be more than one year old.

[VAMSI KRISHNA]

Dear All,

As per the Central Excise Rules 2002, the persons who manufacture the goods specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are chargeable to nil rate of duty or remain fully exempt from the whole of the duty of excise leviable thereon is need not be required to get his primises registrared with central excise departement.

As per the Third Proviso to Rule 4(2)(a) of CENVAT CREDIT Rules 2004, Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year.

By applying Above provisions

Even through assessee has no registration under central excise he can avail the CENVAT credit at the time of purchase by passing a book entry as now the queriest done. In case of SSI units the year limit of 2 is is not applicable as per the Third Proviso to Rule 4(2)(a) of CENVAT credit Rules 2004 . At the time of purchase of capital good itself he eligible to take CENVAT credit but the utilisation only postponed upto when he started collecting duty by taking registration under central excise.

In my view Querist purchased capital good and he showed as an assest without claiming depreciation. So he can take CENVAT credit in view of above provisions.

Respected KASTURI SETHI ji, Let me know relavent provision in excise act and rules made there under for time limit for allowing cenvat credit for inputs/capitalgoods/inputservices when they are purchased before registration under central excise ????

[KASTURI SETHI]

Sh.VAMSI KRISHNA Ji,

You will have to go into depth and xray the wordings of Rule 4 (1) and Rule 9 (1) of Cenvat Credit Rules, 2004. There is not an iota of doubt that one year time limit is applicable for inputs, capital goods and input services except some relaxation for small scale, removal of capital goods as such etc. I stick to my reply as already posted above. This is in continuation to those replies.

 

[YAGAY and SUN]

We are of the view that if SSI units do not avail CENVAT credit during their exemption period due to threshold limit of the turnover, then, after such period when they start paying Central Excise Duty, they can avail the CENVAT Credit. There are some good old judgments on this matter.

[Ganeshan Kalyani]

However, the time limit of one year need to be considered. Thanks.

AI Summary

Cenvat credit on capital goods: eligibility for pre registration purchases subject to time limits and SSI proviso.
The core operative rule is that CENVAT credit on pre registration purchases is generally subject to a time limit (commonly one year for invoices before registration), but capital goods may be claimed in two instalments across two financial years. The Third Proviso to Rule 4(2)(a) permits an assessee eligible for exemption based on clearance value (such as an SSI unit) to claim CENVAT credit for the whole duty on capital goods in the same financial year, with utilisation postponed until excise registration.