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Cenvat Credit of Additional Duty on capital goods imported.

HS Negi (Senior Executive- F&A) (590 Points)

07 June 2011

Dear All

I have a querry that Cenvat credit is allowed 50% immediately reciept of the goods and balance 50% on subsequent year. In the case of imported capital goods there are two parts of duty as bifurcated below

1. CVD along with cess

2. Additional Duty 4%

The query is that as per excise rule (CCR 2004) we have to claim the half cenvat of CVD along with cess. In view of Cenvat on Additional Duty, It is necessary to take the half cenvat or in full ratio.

Regards

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12 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 07 June 2011

Special Additional Duty is not a part of excise,

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 07 June 2011

Rule 3. CENVAT credit. ---(1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of –

(i)	the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act;
(ii)	the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act;
(iii)	the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 ( 40 of 1978);
(iv)	the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ( 58 of 1957);
(v)	the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);
(vi)	the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);
(via)	the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);
(vii)	the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v) (vi) and (via);
(viia)	the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act,
Provided that a provider of taxable service shall not be eligible to take credit of such additional duty;
(viii)	the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);
(ix)	the service tax leviable under section 66 of the Finance Act;
(x)	the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004); and
(xa)	the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and
(xi)	the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 )
Provided that the CENVAT credit shall be allowed to be taken of the amount equal to central excise duty paid on the capital goods at the time of debonding of the unit in terms of the para 8 of notification No. 22/2003-Central Excise, published in the Gazette of India, part II, Section 3,sub-section(i),vide number G.S.R. 265(E), dated, the 31st March,2003. paid on-
(i)	any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and
(ii)	any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004,

including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004.
Explanation.- For the removal of doubts it is clarified that the manufacturer of the final products and the provider of output service shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act on goods falling under heading 9801 of the First Schedule to the Customs Tariff Act.

soni chauhan (Service) (670 Points)
Replied 08 June 2011

Yes, incase of capital goods the additional duty's credit taken in full immediately reciept of the goods .

sameeksha (student) (49 Points)
Replied 10 June 2011

Availment of cenvat credit on imported capital goods-

Cenvat Credit (CVD, edu cess on CVD n SHE cess on CVD)- not exceeding 50% in a given FY as per Rule 4(2)(a) of Cenvat Credit Rules 2004 and balance may be taken in any subsequent FY(s) as per rule 4(2)(b) of said rules.

Cenvat credit of additional duty u/s 3(5) of Customs Tariff- shall be taken immediately as per proviso to Rule 4(2) (a) of CCR 2004. That means 100% credit is available on receipt of it.

important points in this regard are

1.Provider of taxable service shall not be eligible to take credit of such addln duty as per Rule 3 of CCR 2004.

2. No credit of such addln duty shall be utilised for payment of service tax on any output service as per Rule 3 of said rules.

Thank you.

Mallikharjun (Deputy Manager) (304 Points)
Replied 11 June 2011

Credit of ADC can be taken at 100% immediately after the receipt of material. But this credit cannot be used for payment of output services.

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Zia ur Rehman (Studient of law and CA) (51 Points)
Replied 31 December 2011

in case of cenvat on additional duty it would be taken 100% not 50-50 % got it

CA Jignesh Patel (CA) (37 Points)
Replied 31 December 2011

Credit of Additional Duty of Excise will be available 100%

and of CVD you can take 50% in this year and balance in the next financial year

Rajendra Ahire (Accounts Executive) (176 Points)
Replied 03 August 2012

Dear Sir,

We have purchased machinery from china in Spt.2011 & May.2012. but till date we have not taken credit and not showing in ER-1 return of Additonal duty of Custome.

we are manufacturing automobile parts. in this month we want take the credit of ADC. can we taken credit in current return ?

Suppose we cant take the credit of the same. but i have confused that how can i show in return ? bcoze we will show that in ADC coloumn and we want to credit of excise 12% + 2% + 1% ???

Please reply.

Thanks in advance.

Regards,

Rajendra

1 Like

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 03 August 2012

as you have not taken credit of sept 2011 invoice, but year ending is done, and the whole amount including duty is accounted under capital goods, so sept 2011 credit is not admissible, it will amount for unjust enrichment, may 2012 credit can be claimed, provided duty amount is not capitalized.