Cenvat credit on Capital Goods

[shaji thomas]

A Company had availed 50% Cenvat Credit on Capital Goods on the first year of procurement when the unit was availing exemption under Notn.8/2003 and has not paid duty during the entire period(period refered is 2006-07). Is it allowed to avail the 50% credit in the first year ie. under exemption or 100 % credit in subsequent years ?

[CASeetharaman KC]

There is a distinct difference between availament of CENVAT credit and utilisation of the same. In this case the unit can avail the credit on capital goods in the first year upto the extent of 50% and utilise the credit for payment of duty when the unit crosses the turnover limit specified after which the goods become excisable. The balance 50% can be availed in any of the subsequent financial years

AI Summary

Cenvat credit on capital goods can be availed under exemption and utilised when excise liability arises. Cenvat credit on capital goods can be availed during the exemption period while utilisation is deferred until excise liability arises; partial credit may be availed in the initial year under exemption and the balance availed in subsequent financial years for payment of duty when the unit crosses the turnover threshold and goods become excisable.