C form query

Hi, A client of mine purchases taxable raw materials from outside of maharashtra against C Form . He manufactures his final product from these very raw materials. The finished goods are tax free goods and as such are not taxed at all. The sale of said finished goods happens outside of maharashtra, again necessitating the issuance of C Form. Now, my question, how do i clain set-off of the CST i am paying on purchases (if possible) and do i need to issue a C Form to my customers for tax free goods? Or do i have to just make a blank C Form and submit it for the sake of C Forms? Any and all help will be much appreciated.