Provisions for availing cenvat credit on purchase of machinery

[Ram Babu]

Under Central Excise laws,what are the provisions for availing cenvat credit with regard to the purchase of machinery,i.e. at what time we can avail the cenvat credit,i.e.,the time when machinery came to our site or when it will be installed and will be used for the production and if it can be availed at the time when it will be installed and we start using it for production,whether there is any need to intimate excise authorities about its installation.

[Surender Gupta]

For availing Cenvat Credit on the Capital Goods, it is sufficent that you have received such capital goods in your factory premises. You can avail the Credit even before installation of such plant and machinery. Cenvat Credit is available in two installments i.e. 50% in the first year and 50% in the subsequent years. There is no need to intimate central excise authorities separately.

[Madhukar N Hiregange]

Cenvat Credit Rules 2004 in rule 3 provide for the availment and utilisation of credit. As far as capital goods are concerned, credit is available upto 50% in year of receipt and balance in any subsequent years. There is no intimation required under law.

You need the invoice on which CENVAT is paid. You can claim credit of maximum 50% of CENVAT in the first year and the balance in subsequent year(s). HOWEVER, YOU CANNOT CLAIM DEPRECIATION IN INCOMETAX if you avail CENVAT credit on machine.

AI Summary

Cenvat credit on capital goods: credit available on receipt with staged claim and no separate installation intimation required.
Cenvat credit on capital goods is available once the goods are received at the factory premises and is not dependent on installation or use; claimants must hold the invoice evidencing CENVAT and may avail credit in staged instalments across the year of receipt and subsequent years. No separate intimation to central excise authorities is required, and availing Cenvat credit on a machine precludes claiming income tax depreciation for that asset.