Caliming of cenvat with a view of provisons of Rule 4(4)

[Asked by Guest]

please clarify the provisions of Rule 4(4) of Cenvat Credit Rule, 2004 w.r.t. the following example: Cost of Asset=100 (basic) Excise on above=16 Cenvat Claim in first year=50% of 16=8 Depreciation claimed in first year=100*15%=15 How much Cenvat can be claimed in the first year and second year keeping in view the provisons of Rule 4(4)

[Surender Gupta]

In the query it is clear that you have not availed any depreciation on the portion of Cenvat Credit, therefore, you are eligible to claim cenvat credit of Rs. 8 the first year adn balance of Rs. 8 in the subsequent year.

AI Summary

Cenvat credit entitlement clarified under Rule 4(4): un-depreciated credit may be claimed now with the balance deferred.
Where no depreciation has been availed on the portion of an asset attributable to Cenvat credit, the taxpayer may claim the Cenvat credit amount in the first year and defer the balance to the subsequent year in accordance with the allocation mechanism under Rule 4(4).