DOs AND DON'Ts ON CENVAT CREDIT - Central Excise Practice Manual (OLD) - Central Excise

2. DOs AND DON'Ts ON CENVAT CREDIT DOs * Check whether the Cenvat document is original and addressed to your factory; * Check the particulars furnished in the Cenvat documents; * Check whether the inputs/capital goods are actually received within the factory premises; * Check whether the inputs/capital goods are specified under Rule 2(k) and 2(a) respectively of the Cenvat Credit Rules, 2004; * Check whether the inputs/capital goods or input services are used in or in relation to the manufacture of dutiable final products or for providing taxable service; * Reverse the credit taken on the inputs/capital goods, which are sold or removed as such from the factory;. * Reverse the credit availed on the inputs used in the exempted goods; * Pay an amount equal to 10% of the value of the goods cleared at NIL rate of duty where Credit availed inputs are used both in dutiable and exempted goods; * Ensure that Capital goods or inputs sent for job work are received back within 180 days. DON'Ts * Don't take credit based on the ineligible documents such as extra copy, photo copy, credit note etc and documents which do not contain the required particulars; * Don't take credit more than once based on the same invoice; * Don't avail both Cenvat credit and depreciation under Income Tax Act on Capital Goods simultaneously - Double benefit not allowed. * Don't take CENVAT credit on the capital goods which are not covered under the definition of capital goods. * Don't avail 100% CENVAT credit on the capital goods in the same financial year instead of 50% * Don't avail Cenvat credit of Service Tax paid on the services which are not used for the manufacture of the final product. * Don't avail Cenvat credit of Service Tax paid on the outward freight beyond the place of removal.