CONDITIONS FOR AVAILING CENVAT CREDIT

What is CENVAT?Various schemes were introduced by the Central Government in order to bring down the cascading effect of duty. CENVAT was originally known as MODVAT. The system of CENVAT allows a manufacturer/service provider to take credit of excise duty/service tax paid on various raw materials i.e. inputs, capital goods and input services as the case may be to set off against his excise duty/service tax liability.

TYPES OF GOODS

Inputs

Capital Goods

INPUTS

Credit in respect of inputs can be taken immediately on the receipt of inputs in the factory of the manufacture or premises of an output service provider.

Capital Goods In respect of capital goods received in a factory or premises of output service provider at any point of time in a given financial year, credit can be taken only for

an amount not exceeding 50% of the duty paid on such capital goods in that financial year.

CONDITIONSBalance of 50% credit call be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory or premises of a service provider, provided they are still in the possession of the manufacturer or service provider in such subsequent years.

CONDITIONS Where capital goods are

removed as such in the same financial year in which credit is taken, then the assesse

can avail the balance amount of credit in the same year.

CONDITIONS

 CENVAT credit in respect of capital

goods shall not be allowed in respect of that part of the value of capital goods, which represents the amount of duty on such capital goods on which the manufacturer or provider of output service claims depreciation under Section 32 of Income Tax Act, 1961.