CENVAT Credit on Capital Goods.

[Joginder Pal]

We are erecting a plant at our new factory. For that plant, we have purchased various item like pipes, pumps, heaters instruments and other components. We have paid excise duty on such goods. After erection of the plant, we shall be providing service from this new plant. 

Kindly advise whether

1) we can take CENVAT credit on the same after our registration with Service Tax authoities and what is the maximum limit for claim of CENVAT in a year after its erection?

2) What is the provision for the same and what documents need to be kept for such credit and

3) whether such CENVAT credit can be used for making payment of service tax on the service to be provided by us.

AI Summary

Cenvat credit on capital goods - partial credit allowed in year of use with remainder claimable later and usable for service tax.
Cenvat credit for plant erection is available only where goods meet the Cenvat Credit Rules, 2004 definitions of capital goods or input; construction materials for buildings and foundations are excluded. Original duty-paid excise invoices must be retained. Credit on qualifying capital goods is claimable in a staggered fashion with an initial portion in the year of use and the balance subsequently, and such credit may be used to meet service tax liabilities subject to the rules' conditions.