Capital goods less than 10,000/- per piece

[illayyear yanapu]

Dear sir,

We are under the business of Cable operator (MSO). We were import SET TOP BOX (STB) and the same was shown under Fixed Asset of our books of accounts and we will distribute the same to our local cable operator(LCO) by offering income under Activation & Installation against Set Top Box distribute to LCO and We also eligible to claim cenvat credit i.e.CVD on import.

Here, STB per unit cost while purchasing is of ₹ 2500 (Aprox.) Which is less than 10K as per new amendament.

Can we claim 100% cenvat credit on STB which is less than 10K per piece unlike 50% current year and remaining credit in subsequent financial years.

If we do so, shall we show STB fixed asset to STB input (revenue expenditure) under p&l A/c??

guide us..

Thank you.

Illayyear

[Rajagopalan Ranganathan]

Sir,

As per rule 2 (k) of Cenvat Credit Rules, 2004 "all capital goods which have a value upto ten thousand rupees per piece" are inputs and you can avail full credit in the first year itself. In view of specific provision in the rules, it is immaterial if you show STB as capital goods or inputs in your P & L Account.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Rajagaopalan

[illayyear yanapu]

Thank you sir.

AI Summary

Capital goods treated as inputs allow full cenvat credit in first year despite capitalization, per rule. Under Rule 2(k) of the Cenvat Credit Rules, capital goods with value up to the prescribed per piece limit are treated as inputs, allowing availment of full cenvat/CVD credit in the year of purchase; the accounting presentation as fixed asset or input in the profit and loss account does not affect this entitlement.