19 May 2009
Cenvat is the abbreviated form of Central Value Added Tax. Cenvat scheme allows the credit of the duty paid on the inputs and capital goods and service tax paid on input services against the payment of excise duty on final products or service tax on output services to avoid cascading effect of the duty or tax. Pass on the duty means when one trader who paid the excise duty on the purchase of goods when sale the same goods to a manufacturer then he should pass the duty earlier paid by him on the purchase of goods to the manufacturer. In this case manufacturer is eligible for taking cenvat credit of duty paid. Under the Cenvat Scheme only the first stage dealer and second stage dealer can pass on the cenvat credit.
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