CENVAT Credit

Rules, 2004

Double Taxation
Particulars

Double
Taxation

Particulars

CENVAT
Credit Rules

Manufacturer of Cotton
Value of Cotton

100.00

Add: Excise Duty @ 10%

10.00
Total

Assessable Value

100.00

Add: Excise Duty @ 10%

110.00

10.00
Total

110.00

Manufacturer of Fabric
Cost of Cotton

110.00

Add: Value Addition

90.00
Total

Add: Excise Duty @ 10%

Total

Cost of Cotton

100.00

Add: Value Addition

90.00

200.00

Total

190.00

20.00

Add: Excise Duty @ 10%

[Rs. 10 set off & Rs. 9 in cash]

19.00

220.00

Total

209.00

Manufacturer of Garments
Cost of Fabric

220.00

Add: Value Addition

80.00
Total

Add: Excise Duty @ 10%

Cost of Fabric

190.00

Add: Value Addition

80.00

300.00

Total

270.00

30.00

Add: Excise Duty @ 10%

[Rs. 19 set off & Rs. 8 in cash]

27.00

Capital Goods
Selective Approach

Machinery and mechanical appliances

Electronic & electrical equipments
Optical, surgical & photographic equipments
Pollution Control equipments
Components, Spares and accessories of above
Moulds and dies, jigs and fixtures
Motor Vehicle for Service

Comprehensive Approach
All
i.
ii.
iii.
iv.

Inputs

goods
used in factory of manufacturer of final product;
including accessories cleared along with final product;
used in generation of electricity for captive purpose
used by an output service provider for providing output service

Negative List:
A. Light Diesel Oil, High Speed Diesel Oil or Motor Spirit referred as Petrol;
B. All goods used for construction or execution of works contract of a building/civil
structure/part there of or laying of foundation or making structure to support
capital goods
Except: When goods are consumed by a Construction Service Provider in
providing construction service or
by a Works contractor in execution of works
contract;
C. Capital Goods
D. Motor Vehicle;
E. Any goods, such as food items, used in guest house, residential colony, club or a
recreation facility and clinical establishment for personal use or consumption of an
employee;
F. Any goods which have no relationship whatsoever with the manufacture of a Final
product.

Input Services

All Services
i. Used by a provider of output service in providing output service;
ii. Used by a manufacturer, whether directly or indirectly, in or in relation to
manufacture of the final products and clearance of the goods upto the
place of removal;
Includes:
Modernization, Repair or Renovation of factory or premises of Provider of output
service or an office related to such factory/premises; Advertisement or Sales
promotion or Market research; Quality Control;
Storage upto place of
removal;
Negative List:

Accounting, Auditing,
Financing;

Business exhibition,
Security;

Coaching
&
Share Registry,
Computer
Networking,
A. Recruitment,
All services used
for construction
or execution
of works
contract ofLegal
a building/civil
Training;
Service,
Credit
Rating;
structure/part there of or laying of foundation or making structure to support
capitalTransportation,
goods
Inward
Outward Transportation upto place of removal
Except: When goods are consumed by a Construction Service Provider in
providing construction service or
by a Works contractor in execution of works
contract;
B. All services in relation to Motor Vehicle:
Except:
i. Where Motor vehicle is a capital goods
ii. Where assessee is a manufacturer of Motorcar & service is in relation to the
car manufactured by him;

Basics

Input
Services

x
a
T
e d on
c
vi se ice
r
Se Ba vo
In

Service
Provider

M
an
uf
ng act

Manufacturer

Final Goods
(Dutiable)

in
id
ov
Pr g

Capital
Goods
(Machines)

Ex
O C ci
n us se
re to +
ce m
ip s
t
Excise +
Customs
On
receipt

ur
i

Inputs
(Materials)

Services
(Taxable)

Note: Credit availment is always subject to Nexus Theory i.e. there

should be direct or indirect relation between input & output.

Proportionate Credit
Capital Goods
Removed after partial use
Pay higher of the following options
Option I : Payment as per time period of use

Computer & its peripherals

Particulars

Other
Capital
Goods

For Each Quarter or Part of it

Year

Eligible
Credit

10%

8%

5%

1%

1%

Option II :
Payment as per
Realisable Value

Payment
considering
the
realisable value &
of
Duty
For
each Rate
Quarter or prevailing on the
part of it, date of Removal
eligible for
2.5% credit

Common IP/IPs/CG
Used exclusively
in Mfg of Exempted
in Exempted
Dutiable
Goods
Goods
Goods
as well
ororTaxable
Exempted
as Dutiable
Services
Services
Goods