50% CENVAT CREDIT ON CAPITAL GOODS SKIPED IN FIRST F.Y.

[Guest]

DEAR EXPERTS,

we have purchase a machinery in march-17 , and the same received in the factory ...but we skip that 505 amt. of cenvat credit on capital good for the first f.y. , then can we take 100% credit in second year ??

pls. advice ...

regards,

manan

[KASTURI SETHI]

Yes , you can take credit in second year. There are case laws.

[Guest]

thank you sir,

for your valuable reply.

regards,

manan

[Himansu Sekhar]

Rule 4 (2)(a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service or outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory, at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year :

X X X

(b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, X X X

As per Rule 4(2)(a)not exceeding fifty percent means any amount within 50% which means one may not take credit in the first year. In any year after that he will avail the balance credit.

If the credit is not entered in the first year, full credit can be taken in subsequent year, but within one year limitation

[Guest]

it i snot mandatory to avail 50% of credit in the first year but it is not more than 50% is to be availed in the year of acquisition and the balance in the subsequent year. In the same way even 0 is less than 50%, hence 100% can be availed in the subsequent year.

[DR.MARIAPPAN GOVINDARAJAN]

You can take 100% credit in the second year.

[Ganeshan Kalyani]

Yes, Credit can be availed full in the second year.

AI Summary

Capital goods CENVAT credit: initial-year cap allows partial claim and the remainder may be claimed later. CENVAT credit for capital goods is limited to fifty per cent of duty in the year of receipt, with the balance claimable in a subsequent financial year; availment below the cap (including none) in the first year is permitted and the unavailed balance may be taken later, subject to any temporal limitation.