PRAKASH A SOLANKI (Accountant) (42 Points)
21 February 2017How much cenvat credit we can avail on custom duty paid for capital goods imported from China
We can avail full credit one year or half in this and half in second year
satya
(Executive Excise)
(1839 Points)
Replied 21 February 2017
pl note that your query is relating to Customs duty /Cenvat Availment ?
Not allowed as per CCR 2004,
only CVD and SAD4% is available to take Cenvat Credit as per CCR 2004. (50% 1st year, remaining subsequent years).
William Peter.a
(CA Final )
(179 Points)
Replied 21 February 2017
we can avail CVD + SAD (50% In current year and Balance in next year)
satya
(Executive Excise)
(1839 Points)
Replied 21 February 2017
and also note that,
we may avail SAD 100% in current year.
CA RAJNISH KUMAR SHARMA
(senior Team Member)
(43 Points)
Replied 21 February 2017
Dear ,
when we import the capital goods in this case following duty shall be leviable .
1) basic custom duty - we can not take credit of this duty . it is the part of cost.
2) CVD 3(1)- Additional Duty it seem s to be Excise duty and we can take 50% credit same year and balnce will be taken in next year
3) CVD395)- special duty it seems to be VAT and 100 % credit available in same year only manufacturer.
Sanjay S
(Chartered Accountant)
(1375 Points)
Replied 21 February 2017
Hello,
1. Basic Customs Duty is a non-refundable tax and cannot come under the purview of CENVAT Credit Rules, 2004.
2. CounterVailing Duty - CVD u/s 3(1) - Credit 50:50 in Yr 1 & Yr 2:
Normally, Excise Duty paid on Capital Goods are availabele as CENVAT Credit to extent of 50% in 1st year; Remaining 50% in 2nd Year.
Since CVD u/s 3(1) of Customs Law, is levied to bring imports in line with indigenous goods (which are subject to central taxes like ED), its the equivalent of Excise Duty. Hence CENVAT Credit of CVD paid u/s 3(1) is also restricted to 50% in the 1st year. The remaining 50% is allowed only in the 2nd Year.
3. Special Additional Duty - SAD u/s 3(5) - Credit 100% in Yr 1
Coming to the issue of VAT, there is no provision in VAT rules, where-in the Input VAT paid is restricted to anything less than 100% in the 1st year.
SAD paid u/s 3(5) of Customs Tariff Act 1975, is levied to bring imports in line with local purchases (suffering levy of local taxes such as VAT, etc). Hence its the equivalent of VAT. Accordingly, CENVAT Credit of CVD paid u/s 3(5) cannot be restricted since its counterpart being VAT has no such restrictions. Hence CENVAT Credit of this duty can be fully availed in the FY of import itself.
Going further, CENVAT Credit of SAD u/s 3(5) cannot be utilised to pay tax payable on output services. I think the reason why such Credit has not been allowed to a Service Provider is because, SAD is a levy to counter local taxes on Goods, and Services do not suffer such local taxes.
Hope this helps
CAclubindia
