Conditions for availing cenvat credit

1. CONDITIONS FOR AVAILING
CENVAT CREDIT

2. 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.

3. TYPESOF
GOODS
Inputs
Capital Goods

4. 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.

5. 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.

6. CONDITIONS
Balance 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.

7. 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.

8. CONDITIONS
CENVAT credit in respect of capital goods shall
not be allowedin 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 IncomeTax Act,
1961.