Conditions for allowing Cenvat Credit (Rule 4 of the CCR): - Central Excise Practice Manual (OLD) - Central Excise

8. Conditions for allowing Cenvat Credit (Rule 4 of the CCR): Rule 4 of CCR provides for different conditions for allowing Cenvat credit in different situations for inputs and capital goods. The conditions for allowing Cenvat credit are shown below: Credit of duty paid on the inputs is available immediately on receipt of the inputs in the factory of the manufacturer/premises of the output service provider. Cenvat Credit in respect of input service would be allowed on or after the date payment is made for the value of input service and the Service Tax as indicated in the invoice/bill/Challan. * Credit is allowed even if capital goods are acquired on lease, hire purchase or loan agreement from a financing company. * Credit is not allowed, if depreciation is claimed on the amount of duty paid under Section 32 of the Income Tax Act. * Cenvat credit is allowed in respect of jigs , fixtures, moulds and dies sent by a manufacturer of final products to a job worker for the production of goods on his behalf and according to his specifications. * The Credit of duty paid on the capital goods (including capital goods comprised in project imports) would be allowed subject to the following conditions: (a) Upto 50% of the credit would be allowed in the same financial year of receipt of the goods. However, full credit will be allowed in the same year, if the capital goods are cleared as such in the same year. (b) Balance credit would be allowed in any subsequent financial year provided the Capital goods are still in possession and use of the manufacturer / provider of output service (This condition is not applicable to components, spares and accessories, moulds and dies, refractories and refractory materials and goods falling under Heading 68.02 and sub-heading 6801.10). * Credit is not allowed on such quantity of inputs or input services and capital goods used in the manufacture of exempted goods or for provision of exempted services except in the circumstances mentioned in Rule 6(2) of the CCR. * Credit is not allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services except in the case of availment of value based exemption.