C. E. paid before registration can availed CENVAT Credit , Central Excise

[Anil Roy]

Dear All,

We are in progress for set a new unit and in this process we have paid Central Excise to our vendors for purchasing Machinaries, Electrical Items, Iron Made Shed etc.

Now, we are going to registered with Central Excise Department. Now, the quistion is "Can we get CENVAT Credit" of tax paid to our vendors before registration". Further, the bills issued by our vendors are not contained our Central Excise Number.

Regards,

Anil Roy

Posts / Replies

[CA Rachit Agarwal]

Dear Mr. Anil,

You can avail Cenvat Credit for goods brought into the Plant before the Registration provided the Invoice Recieved contains contain the registration number, address of the concerned Central Excise division,] name of the consignee, description, classification, time and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value, of goods and the duty payable thereon.as per Central Excise Rules 2002 and also as per Cenvat Credit Rules, 2004.

Please also go through the definition of Input under Cenvat Credit Rules, 2004 as any goods used for-(a) construction of a building or a civil structure or a part thereof has been excluded from the definition of Input and hence not eligible for Cenvat Credit.

 

[NEERAJ KUMAR, RANCHI]

Dear Mr Anil,

In my view you can avail of the cenvat credit on the goods brought to your factory before getting registered to central excise department. whiling filing the return first time do mention all such goods in the prescribed return and make suitable entry immediately after getting registration in the record which would be maintained by you for cenvat purpose,  Inform about such lit of such records to the Range Supdt, immediately after registration.

You make take care while taking credit as Mr Rachit has advised  that some goods used for construction of building materials are not admissible for cenvat credit.

[deepak sharma]

Dear Mr. Anil

You can avail Cenvat Credit of Central Excise Duty which involved on purchase of Raw Material as well as capital goods, which you purchase before Central Excise Registration, it doesnot matter that that your Central Excise Regd. number should have in the purchase invoice. the matter is, you got a Cenvatable excise invoice. you take online registration and when you will call to submitt the hard copy of Form A-1 (Regd Form) including supporting documents. you prepare a seprate sheet of raw material and other for capital goods, which lying at your premises. in the formate

Bill No. Date Party Name Central Ex. Regd. No. Range Division Description of goods, Qty of goods, Rate, Assessable Value, Cenvat, 2% Edu. Cess, 1% EDu. Cess. Total of Cenvat & Cesses) and write a letter in the name of Assistant/Deputy Comm. of your division. with reference to Rule 3(2) of Cenvat Credit Rules 2004. and pur up the same with your registration application. when the excise people visit the premises for post verification, show them all raw material as per your annexure (prepared by you.

Thanks   

[ANOOP KHANDELWAL]

Can you provide to me any department circular.

 

Anoop Khandelwal

[ram krish]

how  we can take  Cenvat credit for raw materials purchases  before registration

[Ram Avtar Singh]

Capital goods purchased prior to obtaining registration - Cenvat credit available: CESTAT

MUMBAI, NOV 15, 2010: BRIEF facts of the case are that a show cause notice was issued to the respondents alleging that during scrutiny of ARE-1 returns, it was noticed that the respondent had availed Cenvat credit on the capital goods which were purchased prior to their registration with the department.

Following are the details :

++ Respondents applied for Central Excise registration on 7.3.2007 and got the registration certificate on 8.3.2007;

++ They availed Cenvat credit of Rs.2,40,720/- on 10.3.2007 on the capital goods purchased during the month of June 2006 and remaining amount of 50% Cenvat credit of Rs.2,44,538/- was availed on 10.4.2007.

++ Capital goods were installed and commissioned in June 2006.

++ During March 2007 the respondents had not manufactured any dutiable goods for the financial year 2006-07.

The demands were confirmed by the adjudicating authority but the Commissioner (Appeals) dropped the demand.

Aggrieved, the Revenue is before the CESTAT.

The Revenue representative submitted that as the respondent did not manufacture any dutiable goods during the period 2006-07 they are not entitled to take Cenvat credit on these capital goods; in June 2006, at that time of the receipt of the capital goods, the respondents were neither registered with the department nor they were manufacturing any dutiable goods. Reliance is placed on the Larger Bench decision in Spenta International Ltd. vs. Commissioner of Central Excise 2007-TIOL-1089-CESTAT-MUM wherein it was held that the assessee is eligible to take credit with reference to the dutiability of the final product on the date of receipt of capital goods were received. It was, therefore, submitted that the order of the lower appellate authority be set aside.

The respondent assessee submitted that the case law cited by the Revenue representative is not applicable to this case as the issue before the Tribunal in that case is of determination of relevant date for eligibility of Cenvat credit on the capital goods. It was further submitted that the respondents are availing the value based exemption as per Notification no. 8/2003-CE dt. 1.3.2003 wherein it is mentioned that after crossing the limit of exemption the assessee can take the Cenvat credit but shall not utilize the same unless and until the exemption limit crosses. Reference was made to the following clarification given by the department -

Q.54. Whether Cenvat credit on capital goods is available when option to seek registration and payment of Central excise duty is exercised under notification no. 8/2003?

Ans. Yes, para 2(iii) and 2(iv) of Notification no. 8/2003-CE., dated 1.3.2003. The SSI unit can take credit of duty paid on capital goods which can be used after crossing the 100 Lakhs full exemption limit.

It was also submitted that on similar facts in the case of Progressive Systems vs. CCEx., Bangalore, 2010-TIOL-195-CESTAT-BANG it was held that as per CBEC clarification, SSI units can accumulate credit of duty paid on capital goods which can be used after it crosses the aggregate value of exempted clearances as per the notification; as per Rule 4(2) of CCR, 2004, an assessee can avail capital goods credit up to 50% in the year of receipt of the goods and the balance in the subsequent financial years; there is no prescription that credit to any extent has to be availed in the year of receipt of capital goods.

The Bench after hearing both sides observed :

6.I have gone through the submissions made by both the sides and as per the query sought from the department, the department clarified that in the case of value based exemption notification, the unit can take the credit of duty paid on capital goods, which can be used after crossing the full exemption limit and on the similar facts, the issue before the Tribunal was that whether the assessee is eligible to avail Cenvat credit on capital goods procured by the assessee during the year 20.06.2007. Wherein it was held that the assessee is a SSI unit and had availed of the full exemption during the year 2006-07 and had not registered themselves with the department during the financial year and had only got registration on 16.4.2007. The allegation in the show cause notice is that assessee had received the capital goods during 2006-07 and during that period the assessee had not obtained registration and also not opted to avail credit available on the capital goods in April 2007 instead of availing of 50% of the credit during 2006-07 i.e during the year procurement and that the assessee was ineligible of the credit relating to year 2006-07 since the assessee was not registered with Central excise during the period and had also not opted for, in that case the assessee is entitled to take the Cenvat credit on the capital goods. The case law cited by the DR is not applicable to this case as the issue before the Larger Bench was to determine the relevant date for taking the credit on capital goods. Following the ratio of the decision in the case of Progressive Systems (supra), the respondents are entitled for taking Cenvat credit on the capital goods which may be utilized only after crossing the full exemption limit….

Holding that there is no infirmity in the order of the Commissioner(Appeals), the same was upheld and the Revenue appeal was rejected.

[PRADEEP GARG]

Still now I am little confused and affraid that can we avail cenvat credit of duty paid on purchase of capital goods before obtaining CE Registration. Can anybody specifically and categorically clarify it without citing any case but citing with excise rules that we can avail cenvat credit of duty paid before ce registration since we are in process of setting up of a new unit and we are purchasing various machineries involving crores of INR.

Thanks & Regards,

PRADEEP GARG

0897900859