Tran-1 credit for old Capital Goods

[Avishek Modi]

During Jan 2013 we imported machines for our factory (SSI).

Factory was registered under excise but we could not avail MODVAT for the CVD/SAD on the imported machines as our manufacturing turnover never crossed ₹ 1.5 crores and there was no excise payable by us.

Can we take credit for the CVD/SAD on these machines supported by the BOE in the Tran-1 6a?

[So B]

Yes you can avail credit of CVD and SAD in Table 6(a) based on bill of entry.

[KASTURI SETHI]

It is disputed issue. Sword of restriction of one year is hanging. Period wise restrictions imposed, have to be taken care of. When did you cross 1.5 crore ?

[Avishek Modi]

The manufacturing unit did not cross ₹ 1.5 cr per year till date.

[KASTURI SETHI]

There are so many legal hurdles to avail credit on the said capital goods. Not allowed.

[Avishek Modi]

Can I claim credit under Tran-2 if I sell the machines in December 2017?

[KASTURI SETHI]

Read proviso to Section 140(2) & (3) of CGST Act, 2017.

[Himansu Sekhar]

There was no restriction in taking the credit under the existing law even if you were availing the sei exemption. Now the law specifically debars you from taking the credit on the grounds that

A. The invoices are more than one year old

B. The closing balance in the er 3 return is not reflecting the capital goods credit.

AI Summary

Tran-1 credit eligibility for old capital goods faces limitations under time-bar and return-balance conditions on CVD and SAD claims. Eligibility to claim Tran 1 input tax credit for pre GST capital goods (including CVD and SAD) is disputed: one position accepts credit supported by the bill of entry in Tran 1 Table 6(a), but transitional restrictions apply. Key disqualifiers noted are invoices exceeding the permitted time limit and absence of reflected credit in the closing balance of the legacy return, and questions arise whether disposal of assets and Tran 2 adjustments affect entitlement.