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consumption
Cenvat Credit on mould boxes purchased is available as Capital goods. There is no doubt
in respect of availability of Cenvat credit on Mould boxes as because ‘Mould & dies’
have been included within the definition of “Capital Goods” as per Rule 2(b)(iv) of the
Cenvat Credit Rules, 2002. But the question is whether Cenvat credit is available in
respect of input used in the manufacture of mould boxes if they are manufactured for
captive consumption in the factory of manufacturer himself. Under explanation 2 of the
Rule 2(g) of the Cenvat Credit Rules, 2002, which defines input, if has been specified
that input include goods used in the manufacture of the capital goods, which are further
used in the factory of the manufacturer. Notification 67/95 exempts Capital Goods,
manufactured for captive consumption to be further used in the factory of the
manufacturer, from the payment of duty.
However there has been confusion regarding admissibility of Cenvat credit on input used
in the manufacture of the capital goods used for captive consumption because of the Rule
6 of the Cenvat Credit Rules, 2002 which specifies that Cenvat credit will not be allowed
on such quantity of inputs which are used in the manufacture of exempted goods. Since
captively consumed capital goods are exempted because of the above mentioned
Notification 67/95 hence it was being argued by the Central Excise Department that
Cenvat credit on input used in the manufacture of such captively consumed capital goods
should not be available.
Rule 57D of the erstwhile Central Excise Rules, 1944, which was in existence till 1-4-
200, had clearly specified that Modvat Credit will not be denied on input used in the
manufacture of capital goods which are manufactured for further use in the factory of
manufacturer even if they are not chargeable to duty. However there is no such
corresponding provision in the new Cenvat Credit Rules, 2002. The confusion about the
admissibility of the Cenvat credit on input used in the manufacture of captively
consumed capital goods has arisen because of the omission of any corresponding
provision in the line of erstwhile Rule 57D.
In view of the above discussion it is clear that Cenvat credit on input used in the
manufacture of mould boxes is available. Hence we should avail the Cenvat credit on
inputs used in manufacture of all the mould boxes even of the past, as because there is no
time limit within which we have to avail the Cenvat credit on inputs. It is to be noted here
that Cenvat credit will be available to us as “input” and not “Capital Goods” hence we
should make the entry related to availment of credit in the RG23A(Part I& II) register &
not RG23C(Part I & Part II) register.