CENVAT Credit on Capital Goods - Eligibility Criteria

(1) Before taking Cenvat credit on capital goods, manufacturers / service providers should ensure that they have not availed depreciation on the part value representing duty of excise, u/s 32 of Income Tax Act [Refer Rule 4(4) of CCR, 2004]. If depreciation on the value inclusive of CE duty has been availed, credit should not be taken.

(2) Case law of Surya Roshni Ltd. - 2003-TIOL-277-CESTAT-DEL may also be referred wherein it was held that entitlement to be decided at the time capital goods are received by the manufacturer; that subsequent change in the use or goods becoming excisable not to re-determine the question of admissibility of credit. Assessee’s appeal against this order was dismissed by Supreme Court on 10-11-2003 in Civil Appeal No. 8512 of 2003. For more details please see http://www.taxindiaonline.com/RC2/print_story.php?newsid=5816 http://www.taxindiaonline.com/RC2/print_story.php?newsid=14592

These are personal views.

Shvetal Parikh 26/01/2015