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TMI BlogRule 6(4) of CCR 2004X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6(4) of CCR 2004 X X X X Extracts X X X X X X X X Extracts X X X X ..... ; for a period of 2 Years (& further some conditions / provisions). My view is that such provision was already there where Cenvat Credit on Capital Goods exclusively used in exempted goods / services was disallowed but where such manufacture was of exempted & dutiable goods / provision of exempted & dutiable services, it was allowed. Kindly share your views in short what exactly the new provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n wants to provide / what is new & different from earlier provision. Reply By Rajagopalan Ranganathan: The Reply: Sir, Prior to 1.4.2016 rule 6 (40 read as: - "No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the duty of exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year." From 1.4.2016 the same rule reads as: - "No CENVAT credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods or in providing exempted services for a period of two years from the date of commencement of the commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial production or provision of services, as the case may be, other than the final products or output services which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made or services provided in a financial year." Provided that where capital goods are received after the date of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmencement of commercial production or provision of services, as the case may be, the period of two years shall be computed from the date of installation of such capital goods. In my opinion it is the intention of the Govt. that credit of duty paid on capital goods will not be allowed for two year if the capital good are used in the manufacture of exempted goods or used for providing exempted ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. Even if the goods or services become dutiable or taxable during the two year period no credit will be allowed. after two years if they become dutiable/taxable then the Government may allow the credit. But it is not clear since the amendment was not discussed by J.S., TRU-I in his D.O. Letter D.O. F. No. 334/8/2016-TRU dated 29.2.2016. Therefore my advice is you may take up this matter with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government and obtain proper clarification. Reply By surya narayana: The Reply: Dear Friend, The reply given by our learned friend Shri. Govinda Rajan Ji is comprehensive and need no intervention. However, to put it in very simple terms, I am of the view that there is no change in the provisions before and after the amendment except, the eligibility of credit after TWO years subject to cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain conditions which was not there earlier. Best Regards Suryanarayana Reply By Mahir S: The Reply: In the erstwhile provision, cenvat credit on capital goods was not available if it was used exclusively in the manufacture of exempted goods or in providing exempted services. However, the Delhi Tribunal had, in the case of Brindavan Beverages Pvt Ltd, 2014 (10) TMI 807 - CESTAT NEW DELHI held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat simultaneous manufacture of dutiable and exempted goods is not necessary. Cenvat credit would be admissible even if capital goods are used for manufacture of dutiable goods and exempted goods at different points of time. Post the amendment, capital goods can be used exclusively for manufacture of exempted goods or in providing exempted services up to a period of 2 years. It removes the requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of use of capital goods for some taxable activity right from day 1. However, it also puts a cap on the time for which it can be used exclusively for exempt activity, thereby partially limiting Delhi Tribunal's judgement. X X X X Extracts X X X X X X X X Extracts X X X X
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