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TMI BlogCapital Goods - Cenvat Credit Rules, 2004X X X X Extracts X X X X X X X X Extracts X X X X ..... oods/ output services in both, full credit will be allowed. Capital goods used exclusively for exempted final products and output services not eligible. CVD levied u/s 3(5) of Customs Tariff Act [SAD] 100% credit is allowed in the first year itself. 100% credit is allowed in the first year itself where a unit is availing or eligible of SSI exemption [Clearance up to ₹ 4 crores]. 100% credit is allowed in the first year itself where the capital goods are removed as such in the first year itself. On removal of these capital goods, an amount equal to full Cenvat Credit will have to be paid. In case of service provider, actual receipt of capital goods within the registered premises is not necessary. Installation or commissioning of capital goods is not required for taking CENVAT credit. Ownership of capital goods is not essential to avail CENVAT credit. Capital goods obtained on hire purchase/lease/loan eligible. Credit even if hire or lease and license is from non finance company. Credit eligible even if capiatal goods hypothecated to banks. Capital goods can be sent out temporarily. Capital goods sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall not be eligible to cenvat credit. Eligibility of certain motor vehicles and components, spares and accessories as capital goods for following purposes only. Motor vehicles other than tractors, passenger transport vehicles, motor cars and motorcycles. Motor vehicles for transportation of goods used for renting, transportation or courier Motor vehicle designed to carry passengers used for renting or transport or training. Components, spares and accessories of motor vehicles eligible for cenvat credit and when abatement is not availed. Service providers can take credit only if original duty paying document or dealer s invoice is available. Capital goods do not cover equipment or appliance used in office for manufacturer Definition clears that equipment or appliances used in an office will not be eligible as capital goods. This restriction is only for manufacturer and not for service provider. Thus if an assessee is both manufacturer as well as service provider, he should be able to avail Cenvat on equipment or appliance used in an office, if they are used for providing output service. Classification cannot be change at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to excise duty on capital goods and not in respect of input services used in relation to capital goods. Capital goods used in manufacture of exempt intermediate product eligible if final product dutiable. Goods manufactured as job work under cenvat provisions are not exempted goods ,job worker can avail cenvat credit of duty on capital goods. Goods imported under project imports Goods mainly machinery imported under project imports is classified under chapter heading 9801 for customs purposes. Actually the machinery/goods may be classifiable under different chapter heading as per Central Excise Tariff. It has been clarified that even if imported goods are classifiable under chapter heading 9801 for customs purposes,it will be eligible for Cenvat Credit. It has been clarified that in case of inputs included in project import, full credit of CVD will be available immediately.in case of capital goods, upto 50% is available in current year and balance in subsequent year/years. Provision if capital goods are cleared as such in the first year itself If the assesse clears capital goods as such in the first year itself, full 100% Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here an amount is required to be paid (for reversal of credit), it shall be paid by the manufacturer/service provider, on or before the 5 th day of the following month for the months from april to February, and for the month of march it shall be paid on or before 31 st day of march. If the manufacturer/ service provider, who is required to pay an amount (for reversal of credit), fails to pay the amount, it shall be recovered in the manner as provided in rule 14. Capital goods produced/manufactured by a 100% EOU, a unit in EHTP, STP: Cenvat credit on capital goods produced/ manufactured by a 100% EOU,EHTP, STP, and used in the manufacture of final products/provision of service in any place other than India and the unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification No. 23/2003-Central Excise, dated the 31st March, 2003, [G.S.R. 266(E), dated the 31st March, 2003], then the cenvat credit allowed shall be calculated as follows : Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay an amount equal to cenvat credit taken. But the manufacturer/ service provider shall again take the cenvat credit when the capital goods are received in his premises. Cases where 100% credit allowed in the same financial year. The cenvat credit in respect of capital goods, cleared as such in the same financial year, shall be allowed 100% of the duty paid in the same financial year. The cenvat credit on capital goods of additional duty under section 3(5) of the customs tariff act shall be allowed immediately on receipt of the capital goods in the factory of the manufacturer. The cenvat credit in respect of an assesse, where the assesse eligible to avail of the exemption under a notification based on value of clearances in a financial year, shall be allowed for the whole amount of duty paid on such capital goods in the same financial year. The CENVAT credit in respect of capital goods may be taken by the service provider when the capital goods are delivered to such provider, subject to maintenance of documentary evidence of delivery and location of the capital goods. The cenvat credit in respect of capital goods shall be allowed to anufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X
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