CAPITAL GOODS

Section 140(1) - Amount transited towards the closing balance of Cenvat

Credit available as on 30.06.2017

1. Examine whether the capital goods in respect of invoices of which credit is

transited had been capitalised as on 01.07.2017 and also no depreciation has
been claimed on the tax component in case of capital goods credit availed.
2. Check relevant financial statement evidencing payments to suppliers and
capitalization of Capital goods.

Section 140(2)- credit of Unavailed Cenvat Credit in respect of Capital

Goods (balance 50%).
Basic Condtions:
- Should be eligible for credit under both, existing law and GST law.
- Not Applicable to a person opting for composition scheme
1. Examine the receipt of Capital Goods as per GRN and other relevant
documents
2. Examine whether the capital goods and respect of invoices of which credit is
transited had been capitalised as on 01.07.2017 and also no depreciation has
been claimed on the tax component in case of capital goods credit availed.
3. Examine whether any amount of Ed. Cess, S.H. Ed. Cess and KKC has been
transitted
4. Check Relevant financial statement evidencing payments to suppliers and
capitalization of Capital goods

Some instances of wrong credit transited-

1. Credit Availed on capital goods under existing law which were either not
capitalised or removed from the premises after capitalisation but credit
transited in TRAN-1 is not allowed

2. What is the time period within which the capital goods sent for job work has to
be received back by the principal manufacturer? The time period for this is two
years. If not they have to reverse the credit availed along with interest.

3 Capital Goods having value more than Rs 25,000, goods to be

identifiable by a distinct number etc.. Eg. : Dealers of new car.

4. Would we be eligible for credit on Capital Goods in transit and received post
GST? - No provision for such credit is there in GST law. ( FAQ :https://cbec-
gst.gov.in/faq.htm)

5. ITC on capital goods is generally available if they are used in the course or
furtherance of business. However, credit is not available on cars, unless they are in
a business of imparting driving training, or supplying such cars.

6. Whether More than 1 year old Cenvat of CG be claimed in under Section 140
(2) -100% credit • No.