capital goods credit taken

[Guest]

WHAT IS MEAN BY CAPITAL GOODS IN CENTRAL EXCISE ACT AND HOW MUCH WE WILL TAKEN CREIDT IN CENTVAT REGISTER.

[Snehal Kulkarni]

The Capital goods according to the Rule 2 of CCR 2004 is

……………

(a)"capital goods" means:-

      (A) the following goods, namely:-

             ^[3] (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;

             (ii) pollution control equipment;

             (iii) components, spares and accessories of the goods specified at (i) and (ii);

             (iv) moulds and dies, jigs and fixtures;

             (v) refractories and refractory materials;

             (vi) tubes and pipes and fittings thereof; and

             (vii) storage tank,

            used-

             (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or

             (2) for providing output service;

   (B) motor vehicle registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of section 65 of the Finance Act;

   ⁷[C) dumpers or tippers, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), registered in the name of provider of output service for providing taxable services as specified in sub-clauses (zzza) and (zzzy) of clause (105) of section 65 of the said Finance Act.]

    ⁸[(D) components, spares and accessories of motor vehicles, dumpers or tippers, as the case may be, used to provide taxable services as specified in sub-clauses (B) and (C)]

………………

And according to Rule 4 (2)(a)

 

(2) (a) 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:

Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year.

Provided further that the CENVAT credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, in respect of capital goods shall be allowed immediately on receipt of the capital goods in the factory of a manufacturer.

²[Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year.

Explanation.- For the removal of doubts, it is hereby clarified that an assessee shall be "eligible" if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified in the said notification did not exceed rupees four hundred lakhs.]

 

[CASeetharaman KC]

Capital Goods is defined in under Rule 2 of CENVAT Credit Rules, 2004 which is as given below:

In these Rules unless the context otherwise requires: 

(a)"capital goods" means:-

      (A) the following goods, namely:-

             ^[3] (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;

             (ii) pollution control equipment;

             (iii) components, spares and accessories of the goods specified at (i) and (ii);

             (iv) moulds and dies, jigs and fixtures;

             (v) refractories and refractory materials;

             (vi) tubes and pipes and fittings thereof; and

             (vii) storage tank,

            used-

             (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or

             (2) for providing output service;

   (B) motor vehicle registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of section 65 of the Finance Act;

   ⁷[C) dumpers or tippers, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), registered in the name of provider of output service for providing taxable services as specified in sub-clauses (zzza) and (zzzy) of clause (105) of section 65 of the said Finance Act.]

    ⁸[(D) components, spares and accessories of motor vehicles, dumpers or tippers, as the case may be, used to provide taxable services as specified in sub-clauses (B) and (C)]

You can take 50% Cenvat credit in the year in which the Capital Goods are received in the factory or premises and the balance 50% in the subsequent years.

CENVAT credit in respect of capital goods is allowable for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year

AI Summary

CENVAT credit on capital goods limited in the year of receipt, with remainder claimable later; full credit if cleared same year. Capital goods encompass specified machinery, pollution control equipment, components, moulds, refractories, tubes, pipes and specified vehicles used in manufacture or for providing output services. CENVAT credit on capital goods received in a factory or service premises is restricted to fifty per cent of the duty in the year of receipt, with the balance in later years, except that full credit is allowable if the capital goods are cleared as such in the same financial year; additional duty credit is allowed immediately on receipt and full-year allowance may apply where exemption eligibility rules are met.