Cenvat credit on trading items

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This query is : Resolved

NAGA CHAKRA SRINU MAJJI (Querist)

09 June 2015
Sir,

We are manufacturer, and purchased some goods and sold without any changes in the goods (just trading)?

While purchasing the goods we got the Excise invoice, Can I take the Cenvat credit?

We sold the same some party the same are we collect excise duty from them?

Please clarifty any one.

Santosh Kalburgi

Santosh Kalburgi (Expert)

10 June 2015 Hello Mr. Naga Chakra,

For the goods purchased and removed "as such", i.e. without being used into manufacturing, like in your case. You are not supposed to take the cenvat credit on those materials, neither you need to collect excise from your customers.
so if you purchase a product for Rs 100 + Excise 12.5 and you want to sell it at Rs.150, your cost of purchase will be Rs 112.5 as you cannot claim cenvat. And on sale you should not charge any excise duty as it is not manufactured. In your excise return, you need to reverse the cenvat if already taken, else no action required.
But if you will be carrying on this type of transaction often, you have an option to get registered also as a dealer and pass on the Excise to your customers so that your price will be competitive.
Regards,
CMA Santosh G Kalburgi
Cost Accountant
9742022309

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