What are Capital goods
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In simple language,it means all machines used for providing output service.
Even components,spare parts,accessories of these machines are capital goods and 1/2 input available
Whether Motor Vehicles are Capital Goods?
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Normally Motor vehicle is not considere as capital goods
However,in following cases,they are Capital goods
| Type of Motor Vehicle | Capital Goods for |
| Goods Transport Vehicle* |
1.Courier Service
2.Providing service of renting goods vehicle 3.Transportation of inputs and capital goods used for providing an output service; |
| Passenger Transport Vehicles* |
1.Transportation of passengers;(Taxi Service) or
2.Renting of such motor vehicle;(Cars on Rent) or 3.Imparting motor driving skills;(Car Driving schools) |
| Dumpers/Tippers/Tractors/Road Roller/Loaders etc | For All Service Providers (These are normally used by those in construction business) |
Note:-
*Even Components,Spareparts and Accessories are Capital goods in these cases and 50% input available
*These Motor vehicles should be registered in person's name,only then input will be available
Also 2 wheeler like motor cycles are not considered capital goods
When can Input be taken?
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50% Of Input can be claimed immediately on receipt of goods in factory
Payment to party is not relevant
Maximum period to take input is 1 year from date of Invoice
In case of Removal of Inputs as such (Purchase Return/Sale of Inputs),Cenvat taken has to be reversed
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Details of Items on Which Cenvat on Inputs not available
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Petrol/Diesel
Motor vehicles
Goods for personal use of employees
(like food items, goods used in guesthouse, club, recreation facility)
Construction Services of Building etc
Manufacturer can claim upto 50% Cenvat credit immediately on receipt of capital goods in
Premises-
In case of Output Service Provider
Job worker Premises-
In case goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service,
Note:-
50% Cenvat can be claimed immediately on receipt of goods.
(Note this condition not there in case of capital goods used outside the factory for generating electricity for captive consumption)
Is it compulsory to avail 50% or can we claim less than 50% also?
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Availing 50% in first year not compulsory
Assesses can claim less than 50% also in first year and balance in succeeding years
For example 25% in first year and 75% in second year
When to take balance 50% Cenvat
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Remaining 50% Cenvat can be claimed anytime during next financial years provided capital goods are in possession of the manufacturer
This requirement of being in possession is not there in case of components, spares and accessories, moulds, tools and dies and refractories and refractory materials
When can Input be taken if Goods sent directly to job worker
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Sometimes, service provider purchase good/capital goods and send them directly to job worker for processing
Earlier,credit was available only when goods were ultimately received by factory of manufacturer/service provider premises
Now Cenvat is available to manufacturer/service provider as soon as the goods are received by job worker,
[Rules 4(1) and 4(2)(a)]
Time period for taking Cenvat on Capital Goods
Cenvat Credit can be taken within 1 year from date of Invoice/Bill / Challan (Documents mentioned in Rule 9 (1)
(Note:-Earlier the period was 6 months)
Whether Cenvat available if Capital Goods not purchased?
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Yes.
Credit in respect of Capital Goods, even if they are acquired either on lease, hire or loan agreement from a financing company.
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Whether Cenvat can be claimed of Capital Goods if Depreciation claimed under Income Tax?
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Yes.
But Depreciation can be claimed only on purchase price of fixed asset, not on the excise duty part
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