Cenvat Credit

This query is : Open

Piyush Jain (Querist)
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29 July 2009 Dear Professional Colleagues,

One of my client is having Head Office registraion as Input Service distributor and factory registered with excise.

Now the Head Office issues Cenvat Invoices to Factory for cenvat taken on services bills recevived on all India basis.(Centralised Registration)

Factory is maintaining separate accounts for receipt, consumption and inventory of inputs used in the manufacture of dutiable final products and the quantity of inputs used in the manufacture of exempted goods. Accordingly fatory take CENVAT credit only on that quantity which is used in the manufacture of dutiable goods. It may also be noted that there is no any inputs which is commonly used in the manufacture of dutiable and exempted goods.

As Factory is taking full Cenvat credit in respect of the invoices raised by the Head Office and Head Office is issuing the CENVAT invoice on the basis of rule 7 and Head Office is not having any record of exempted goods with them, now how to not to claim CENVAT on services availed for exempted goods or common services on proportionate basis or Factory can claim the full cenvat.

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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30 July 2009 Under the provisions there is no facility to do so. There seems tobe a difficulty in this regard.While distributing the credit if the HO were to send the 16 common services credit separately and the other separately compliacne maybe possible.

If not some ad hoc proceudre would have to be followed indicating that the credits are not being taken in full at the facotroy where such credits availed. Maybe proportion of the exempted turnover excluded / reversed.

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