Cenvat Credit, Central Excise

[CA Rachit Agarwal]

We are manufacturing a commodity which is excisable.

As as an expansion to our existing unit and new products, we have purchased capital goods on which excise duty has been paid. Commercial production will start after 3 years.

Whether we are eligible to avail 50% of Cenvat Credit for the capital goods received during the year of purchase/receipt, although capital goods will be used after 3 years?

Posts / Replies

[Brijesh Verma]

Dear Rachit Ji

The availability of CENVAT Credit is basically bound by rule 4 of CCR'04. The conditions relevant for capital goods are contained in Rule 4(2) thereof. The condition for availing credit in respect of Capital Goods is merely 'receipt based' and not 'user-based'.

Therefore, you can take 50% in first year notwithstanding year of actual 'put-to-use' of the machinery.