Treatment of cenvat credit of capital goods

[Asked by Guest]

what is the treatment of cenvat credit availed on capital goods, if value of such goods has been written off by assessee after being put to use?????

[Snehal Kulkarni]

 

You have to reverse the Cenvat Credit.

Please refer Rule 3(5)(b) of CCR 2004.

 

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(5B). If the value of any,

            (i)         input, or

            (ii)        capital goods before being put to use,

 

on which CENVAT Credit has been taken is written off fully or where any provision to write off fully has been made in the books of account, then the manufacturer shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods:

 

                   Provided that if the said input or capital goods is subsequently used in the manufacture of final products, the manufacturer shall be entitled to take the credit of the amount equivalent to the CENVAT Credit paid earlier subject to the other provisions of these rules.

 

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AI Summary

Cenvat credit reversal required when capital goods are written off; credit may be reclaimed if goods are later used in manufacture.
CENVAT credit must be reversed where an input or capital good on which credit was taken is written off fully or a full provision for write off is made before the good is put to use; the manufacturer shall pay an amount equivalent to the CENVAT credit taken. If the said input or capital good is subsequently used in manufacture, the manufacturer may again take credit equivalent to the CENVAT credit paid earlier, subject to other provisions of the rules.