Availment of CENVAT Credit on Capital Goods

[Asked by 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

Cenvat credit timing: unclaimed first-year capital goods credit may be claimed fully in subsequent year with intimation.
Rule 4(2)(a) permits Cenvat credit on capital goods only up to fifty per cent of duty paid in the financial year of receipt, with the remaining fifty per cent claimable in the next financial year. If the initial fifty per cent was not availed in the year of purchase, the entire credit may be taken in the subsequent year provided the department is intimated.