Set off of counter veiling duty and adl exicise duty
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 October 2012
Dear Experts,
Can you pls guide me on use of Counter veiling duty and Additional excise duty paid by assessee and with whom we can set off both these duties.
Can you pls guide me on use of Counter veiling duty and Additional excise duty paid by assessee and with whom we can set off both these duties.
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 October 2012
waiting for some reply.....
22 October 2012
Manufacturer can take the cenvat credit on the part of CVD & SAD.
Querist : Anonymous
Querist :
Anonymous
(Querist)
25 October 2012
Hi Arun ,
Thanks for reply on my query..but i need bit more detail ans...like on what components of CVD and SAD cenvat credit can be claimed etc.
Thanks for reply on my query..but i need bit more detail ans...like on what components of CVD and SAD cenvat credit can be claimed etc.
25 July 2025
### **Set-Off of Countervailing Duty (CVD) and Additional Excise Duty (SAD)**
To guide you through the set-off and use of **Countervailing Duty (CVD)** and **Special Additional Duty (SAD)**, we need to look into the relevant provisions under the **Central Excise Act** and the **CENVAT Credit Rules**.
Here’s a detailed answer, including **which components of CVD & SAD are eligible for CENVAT Credit**, how the set-off works, and the relevant provisions.
---
### **1. Countervailing Duty (CVD) and Special Additional Duty (SAD)**
* **CVD** is a duty imposed on imported goods to counterbalance excise duty that would have been levied if the goods were manufactured domestically. It's applicable under **Section 3 of the Customs Tariff Act**.
* **SAD** is an additional duty levied under **Section 3(5) of the Customs Tariff Act**, which is typically applicable to **imports** to offset the effect of Sales Tax/VAT that would have been paid if the goods were sold domestically.
---
### **2. CENVAT Credit on CVD and SAD:**
Under the **CENVAT Credit Rules, 2004**, manufacturers can take credit of CVD and SAD paid on imported goods. The following points explain this in detail:
#### **a. CVD (Countervailing Duty):**
* **CVD is eligible for CENVAT Credit** if the goods are used in the manufacture of excisable goods or for providing taxable services.
* **Credit Available**: Manufacturers can claim credit of the **CVD paid on imports** as long as the imported goods are used in the manufacture of **excisable goods** or in the provision of **taxable services**.
#### **b. SAD (Special Additional Duty):**
* Similarly, **SAD paid on imports** is also eligible for **CENVAT Credit**.
* **Credit Usage**: The credit can be utilized for the payment of **excise duty on goods manufactured** or **service tax on services provided**.
#### **Conditions for CENVAT Credit on CVD and SAD:**
* **Eligibility**: CVD and SAD credit is allowed only if the goods on which duty has been paid are used in the manufacture of **excisable goods** or for providing **taxable services**.
* **CENVAT Credit Account**: The credit must be reflected in the **CENVAT Credit Register** maintained by the manufacturer/service provider.
* **Matching Invoices**: You need to have proper invoices to claim the credit. The invoices must be from the **Customs Department** showing the CVD and SAD paid.
#### **When CENVAT Credit of CVD and SAD Cannot Be Claimed**:
* If the goods are used for **non-excisable goods** or in the provision of **exempt services** (like health services, education, etc.), the credit cannot be claimed.
* **Capital Goods**: If the CVD/SAD is paid on capital goods (like machinery), the credit can also be availed under CENVAT rules, provided these capital goods are used in the manufacture of excisable goods or in providing taxable services.
---
### **3. Set-off and Utilization of CENVAT Credit:**
Once the CENVAT credit on CVD and SAD is availed, it can be utilized in the following manner:
#### **a. Set-off Against Excise Duty**:
* **Excise duty payable** on the goods manufactured by the company can be set off using the CENVAT credit available on the **CVD and SAD**.
#### **b. Set-off Against Service Tax**:
* If the company is a service provider, **CENVAT credit on CVD and SAD** can also be used to pay **Service Tax** on the services provided, provided the services are **taxable**.
#### **c. Transferability of Credit**:
* The CENVAT credit on **CVD and SAD** is **non-transferable**; it can only be used within the company and is not allowed to be transferred to another entity.
---
### **4. Components of CVD and SAD Eligible for CENVAT Credit:**
Now, to answer the specific query about **what components of CVD and SAD** can be claimed under CENVAT credit:
#### **a. CVD (Countervailing Duty)**:
* **Full CVD** (the duty imposed on imported goods) can be credited, provided the goods are used in the manufacture of **excisable goods** or for providing **taxable services**.
#### **b. SAD (Special Additional Duty)**:
* **Full SAD** paid on imported goods can also be claimed as CENVAT credit if the goods are used in the manufacture of **excisable goods** or **taxable services**.
### **5. Example**:
Let's take an example to clarify the application of CENVAT credit on CVD and SAD:
* **Company A** imports raw materials worth ₹10,00,000. The CVD paid is ₹1,00,000, and the SAD paid is ₹50,000.
* **Manufacturing Use**: Company A uses the raw materials to manufacture **excisable goods**. The company can avail CENVAT credit on both the **CVD (₹1,00,000)** and **SAD (₹50,000)**.
* **Tax Payable**: When Company A manufactures the excisable goods, they can set off the excise duty payable with the CENVAT credit. For example, if excise duty payable is ₹2,00,000, they can use the CENVAT credit to pay this, reducing their cash outflow.
---
### **Conclusion:**
1. **CVD and SAD can be used to claim CENVAT credit**, which can then be set off against excise duty payable or service tax liability.
2. **Credit can only be claimed if the goods on which CVD/SAD is paid are used for manufacturing excisable goods or for providing taxable services**.
3. **Components eligible for CENVAT credit**: The **entire amount of CVD and SAD** paid on imports can be claimed as CENVAT credit.
4. **Documentation**: Ensure that the **Customs invoices** for CVD/SAD payments are properly recorded in the **CENVAT Credit Register** to ensure smooth claim.
---
If you have further questions or need clarification on any specific point, feel free to ask!
To guide you through the set-off and use of **Countervailing Duty (CVD)** and **Special Additional Duty (SAD)**, we need to look into the relevant provisions under the **Central Excise Act** and the **CENVAT Credit Rules**.
Here’s a detailed answer, including **which components of CVD & SAD are eligible for CENVAT Credit**, how the set-off works, and the relevant provisions.
---
### **1. Countervailing Duty (CVD) and Special Additional Duty (SAD)**
* **CVD** is a duty imposed on imported goods to counterbalance excise duty that would have been levied if the goods were manufactured domestically. It's applicable under **Section 3 of the Customs Tariff Act**.
* **SAD** is an additional duty levied under **Section 3(5) of the Customs Tariff Act**, which is typically applicable to **imports** to offset the effect of Sales Tax/VAT that would have been paid if the goods were sold domestically.
---
### **2. CENVAT Credit on CVD and SAD:**
Under the **CENVAT Credit Rules, 2004**, manufacturers can take credit of CVD and SAD paid on imported goods. The following points explain this in detail:
#### **a. CVD (Countervailing Duty):**
* **CVD is eligible for CENVAT Credit** if the goods are used in the manufacture of excisable goods or for providing taxable services.
* **Credit Available**: Manufacturers can claim credit of the **CVD paid on imports** as long as the imported goods are used in the manufacture of **excisable goods** or in the provision of **taxable services**.
#### **b. SAD (Special Additional Duty):**
* Similarly, **SAD paid on imports** is also eligible for **CENVAT Credit**.
* **Credit Usage**: The credit can be utilized for the payment of **excise duty on goods manufactured** or **service tax on services provided**.
#### **Conditions for CENVAT Credit on CVD and SAD:**
* **Eligibility**: CVD and SAD credit is allowed only if the goods on which duty has been paid are used in the manufacture of **excisable goods** or for providing **taxable services**.
* **CENVAT Credit Account**: The credit must be reflected in the **CENVAT Credit Register** maintained by the manufacturer/service provider.
* **Matching Invoices**: You need to have proper invoices to claim the credit. The invoices must be from the **Customs Department** showing the CVD and SAD paid.
#### **When CENVAT Credit of CVD and SAD Cannot Be Claimed**:
* If the goods are used for **non-excisable goods** or in the provision of **exempt services** (like health services, education, etc.), the credit cannot be claimed.
* **Capital Goods**: If the CVD/SAD is paid on capital goods (like machinery), the credit can also be availed under CENVAT rules, provided these capital goods are used in the manufacture of excisable goods or in providing taxable services.
---
### **3. Set-off and Utilization of CENVAT Credit:**
Once the CENVAT credit on CVD and SAD is availed, it can be utilized in the following manner:
#### **a. Set-off Against Excise Duty**:
* **Excise duty payable** on the goods manufactured by the company can be set off using the CENVAT credit available on the **CVD and SAD**.
#### **b. Set-off Against Service Tax**:
* If the company is a service provider, **CENVAT credit on CVD and SAD** can also be used to pay **Service Tax** on the services provided, provided the services are **taxable**.
#### **c. Transferability of Credit**:
* The CENVAT credit on **CVD and SAD** is **non-transferable**; it can only be used within the company and is not allowed to be transferred to another entity.
---
### **4. Components of CVD and SAD Eligible for CENVAT Credit:**
Now, to answer the specific query about **what components of CVD and SAD** can be claimed under CENVAT credit:
#### **a. CVD (Countervailing Duty)**:
* **Full CVD** (the duty imposed on imported goods) can be credited, provided the goods are used in the manufacture of **excisable goods** or for providing **taxable services**.
#### **b. SAD (Special Additional Duty)**:
* **Full SAD** paid on imported goods can also be claimed as CENVAT credit if the goods are used in the manufacture of **excisable goods** or **taxable services**.
### **5. Example**:
Let's take an example to clarify the application of CENVAT credit on CVD and SAD:
* **Company A** imports raw materials worth ₹10,00,000. The CVD paid is ₹1,00,000, and the SAD paid is ₹50,000.
* **Manufacturing Use**: Company A uses the raw materials to manufacture **excisable goods**. The company can avail CENVAT credit on both the **CVD (₹1,00,000)** and **SAD (₹50,000)**.
* **Tax Payable**: When Company A manufactures the excisable goods, they can set off the excise duty payable with the CENVAT credit. For example, if excise duty payable is ₹2,00,000, they can use the CENVAT credit to pay this, reducing their cash outflow.
---
### **Conclusion:**
1. **CVD and SAD can be used to claim CENVAT credit**, which can then be set off against excise duty payable or service tax liability.
2. **Credit can only be claimed if the goods on which CVD/SAD is paid are used for manufacturing excisable goods or for providing taxable services**.
3. **Components eligible for CENVAT credit**: The **entire amount of CVD and SAD** paid on imports can be claimed as CENVAT credit.
4. **Documentation**: Ensure that the **Customs invoices** for CVD/SAD payments are properly recorded in the **CENVAT Credit Register** to ensure smooth claim.
---
If you have further questions or need clarification on any specific point, feel free to ask!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Applicablity on tds
- Unable to generate and save json file for updated return
- GST payable under RCM
- Regarding TDS not deducted on rent
- Inverted Tax Structure & Unutilized ITC on Services
- PRODUCT AND SERVICE CATEGORY CODE
- Which SAC code should be selected??
- Tax audit & Switching from Presumptive taxation
- Section 194I not showing in TDS RPU for Compnay Assessee for TDS on rent
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
