100% Credit availed in ER-1 of Capital Goods

[Prashant patra]

Dear Sir

We have wrongly taken & shown the 100% capital goods credit in ER-1 return for the month of june-2012

Kindly suggest whether we need to pay interest & how much is it.

Thanks

Prashant

[JAMES PG]

You have to reverse the credit of 50% and pay interest @18% from the date of taking credit till date of reversal

[YAGAY andSUN]

No need to pay the interest if you had availed the CENVAT credit but not utilised.  This aspect has been clarified in the Budget 2012.

AI Summary

Capital goods CENVAT credit reversal may require partial reversal and interest unless credit remained unutilised per budget clarification. An ER 1 entry showing full Capital Goods CENVAT credit requires reversal of the excess credit and may attract interest from the date the credit was availed until reversal; an alternative view asserts no interest is payable where the availed credit remained unutilised, relying on a budgetary clarification.