Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
24 September 2009Dear Sirs,
Can we take cenvat credit on inputs used in manufacture of capital goods when no production of final product is taking place ?
What is the difference between taking cenvat credit and utilizing cenvat credit ?
Regards
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 24 September 2009
You can take cenvat credit on capital goods -50% this year and 50% for next financial year even though you have not yet started the commercial production.Taking cenvat credit means taking credit in RG23C register since capital goods and utilising cenvat credit means setting of your excise duty liablity against the credit of cenvat available
Sushma Mevacha
(Executive)
(394 Points)
Replied 26 September 2009
Jeevesh, here you are asking if you can avail the cenvat ion the menufacturer of Capital goods, and that is not your final product.. Please clear regarding you capital goods... I mean where it will be used ??
CA Pushpendra Gaur
(CA in L & T)
(2843 Points)
Replied 30 September 2009
well i do not agree with sivaram, as input used for manufacture of capital goods is an input and 100 % cenvat inpul can be utilised in the first year itself
taking Cenvat credit means credit is available with u for utilization
and utilization means utilizing the credit available with u for payment of excise duty,
and also taking of cenvat credit is of no use until, the production is made bcoz, until theres is an output liability, no relevance of utilization arises. although the same would b availble with u as Excise Input
pushpendra
Sushma Mevacha
(Executive)
(394 Points)
Replied 01 October 2009
If the material is used in the making of Capital Goods other then Final Product & the Capital Goods is not the part of your production area.. One is not liable to take Cenvat Credit on the Input.
CA Pushpendra Gaur
(CA in L & T)
(2843 Points)
Replied 01 October 2009
To all guys
Sushma, & sivaram
i referred to the Cenvat rules u can find same in BAngar-cafinal book or Datey's book or bare act
"As per explanation 2 added to RUle 2(k) of Cenvat rules, Inputs includes goods used in the manufacture of capital goods which are further used in the factory for further production"
VIPLOVE GOYAL
(CA STUDENT)
(58 Points)
Replied 01 October 2009
hiiii
ya fren u can take d cenvat credit nd when ur producion get started and goods remove from factory then such duty can be set off from ur cenvat credit simple.........
CA Pushpendra Gaur
(CA in L & T)
(2843 Points)
Replied 01 October 2009
Dear Sushma, even if the capitall goods manufactures is not used for production, it's a normal good, on whose manufacture u are required to pay Excise duty as a normal product and you can utilise the CENVAT input utilised for manufacture of such capital good.
moreover, the concerned person who put the querry says that although capital goods is manufactured, but the use of same capital good for production has not been started. in the same case although the Cenvat input can be taken, but cannot be utilized for payment of excise duty till it contributes to manufacture and in jeevesh question since there is no prodution therefore no question of Excise liability arises and therefore no question of input availment arises.
i had conducted audits of many, and if the inputs are purchased itself for manufacture of capital goods, since they are considered as Inputs & on inputs, the excise duty is available when they r received in the factory
So, final conclusion is that you can take 100% of the Cenvat input on such goods which are used for the manufacture of capital goods can be taken in the first year itself.
CAclubindia
