Cenvat on capital goods - Reg

[vinay wakde]

We are receiving various accessories/component of specified capital goods falls under Chapter No. 84, such as Rubber Hose (Ch No. 4009 22 00) used for Hydraulic system, CAF Gasket (Ch.No.6812 93 00), Rubber Diaphragm (Ch No.40) used for various Valves, O-Ring (Ch.No. 4016 93 30) Oil seal (Ch No. 4016 93 00) for Pumps etc.

We are taking 50% CENVAT credit on these items immediately after receipt of the goods in the factory treating as accessories of specified Capital goods (Ch.No. 84)  & balance 50% credit shall be taken in next financial year in terms of Rule 4(2)(b) of CENVAT credit Rules,2004.

At the time of maintenance, if the accessories/components mentioned above are required to be replaced in same financial year. Kindly let us know whether balance 50% credit to be taken in next year against these receipt shall be eligible for us or not.   

Regards,

VINAY

 

 

[rakshit verma]

Not at all. 100% credit is allowed only in cases where capital goods is cleared in the same financial year.

 

Rakshit Verma

[NK SHETE]

It seems tha answer is given with reference to with reference to Rule 3 (5) of CCR but the query is for Rule 4(2) (b) ibid. 

[rajkumar shukla]

i agree with mr rakshit verma.it is allowed only in cases where capital goods are to be cleared inthe same financial year. otherwise, it is only 50%.

[NEERAJ KUMAR, RANCHI]

What Mr Shete has said appears correct. Query appears to be in connection with Rule  4(2)(b) of  CCR  and in case of spares and parts of machinery eligible for cenvat credit as capital goods, full cenvat credit can be taken in the same financial year.

[rajkumar shukla]

I am still of the view that the exeption is that in case of consumables like spare parts , components, moulds and dies,refractories, refractory materials etc., the balance credit can be taken in subsequent year ,even if these are not in possession. The obvious reason is that these may not be available next year or subsequent years at all and even if these are available, it willbe practically impossible to locate them and prove their possession.

AI Summary

Cenvat credit timing: whether deferred balance for accessories treated as capital goods can be claimed when replacements occur.
Whether input tax credit on accessories and components treated as capital goods may be claimed in full where 50% credit is taken on receipt and the remaining 50% is deferred to the next financial year, particularly when such accessories are replaced within the same financial year; the discussion records contrasting interpretations of Rule 4(2)(b) of the CENVAT Credit Rules, 2004-one limiting 100% immediate credit to cases where the capital goods are cleared the same year, another allowing full credit for spares and parts qualifying as capital goods, and a practical view advocating an exception for consumables and certain spare components.