Availment of CENVAT Credit on Capital Goods

[Guest]

A Company failed to avail 50% Cenvat Credit on Capital Goods on the first year of procurement. Is it possible to avail the entire 100% in the subsequent years ?

[Snehal Kulkarni]

Cenvat Credit Rule 4 (2) (a)  to be read as..........

 "The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service 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:"

It is clear that you have take the 50% credit in the year of purchase and receipt of CG in factory. and remaining 50% in the next financial year.

If you have not availed the 50% credit in year of purchase, then you may take 100% credit in next year, provided that you have to intimate the department.

AI Summary

Company Can Claim 100% CENVAT Credit Next Year if Initial 50% Unclaimed, Per CENVAT Credit Rule 4(2)(a). A company inquired about availing 100% CENVAT Credit on capital goods in subsequent years after failing to claim 50% in the first year of procurement. The response clarified that according to CENVAT Credit Rule 4(2)(a), only 50% of the credit can be claimed in the year of purchase, with the remaining 50% available in the following financial year. However, if the initial 50% was not claimed, the company can take the full 100% credit in the next year, provided they notify the relevant department.