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CENVAT CREDIT

Adv. S Sharma (Lawyer) (574 Points)

08 March 2008

HI ALL

(querry is only for my conceptual clarity)

QUERY: - I m manufacturer of a product, suppose "D" (Final Product) (Chemical Product)

now, for manufacturing of final product I used inputs on which I m paying duty. now at the time of manufacturing of final product "at intermediate stage" some new product come into existance ,means product "B" which hav a place in Tariff heading (comes to the market for sale and purchase) but, this product "B" is used in manufacturing of the final product "D".

should I pay duty on the intermediate product "B" ???? yes/no

My view 'no', because it will lost its identity while manufacturing the final product "D".

plz clear my concept with judicial views

Regards,

Sachin

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9 Replies

Rishi Vyas (Internal Auditor) (189 Points)
Replied 10 March 2008

Mere mention in the Tarrif heading does not make a thing dutiable. Test of dutiability is marketability and moveability. Is the product B marketable and movable, i.e. can it be sold or purchased in market as it is. If yes, duty will be levied and has to be paid. Eg : Glycerin , scrap

Adv. S Sharma (Lawyer) (574 Points)
Replied 10 March 2008

Hi Rishi yes, product B is marketable but it is consumed for manufacturing of final product. so it b liable to duty? how would department come to knw that product B come into existance ? B is manufactured by a process but after complettion of that process it consumed in another process and a new article come into existance which is also marketable, so it be liable to duty ?

(Guest)

yes duty is liable on intermediate product. as the intermediate product is marketable you have to pay duty and to claim cenvat credit on input i.e.intermediate product

Adv. S Sharma (Lawyer) (574 Points)
Replied 10 March 2008

thx Neehal

Adv. S Sharma (Lawyer) (574 Points)
Replied 10 March 2008

hi Neehal, plz see my EOU query too i'll gr8full to u

(Guest)

hi, as the intermediate product is captively consumed by the manufaturer for the final product which is dutiable, the intermediate product is exempted.there is a separate notification for this exemption.

Adv. S Sharma (Lawyer) (574 Points)
Replied 10 March 2008

hi senthil plz giv me he notification no. of the same, which u mentioned above or if possible THAN SEND ME THE WHOLE NOTIFICATION ON THIS CLUB THX AND REGARDS SACHIN

(Guest)

Hi sachin The present condition is that department has notofied that if a final product is excisable than all the intermediate product or goods captively consumed which were used in manufacturing than it will not be excisable. On the contrary iffinal product is not dutiable than the intermediate product shall be dutiable only on satisfaction of 4M's mentioned in section 3(1) of Central excise act 1944. The condions are given below for ur reference 1.-menufactured in India 2.-mentioned in CETA 1975 3.-movable 4.-marketable in the same condition

(Guest)

hiii nehal i am not agreed with ur contention that mere satisfaction of Section 3(1) intermediate goods will vbe dutiable. Can u let me know the consequences if the final producti.e. D, is also dutiable. plz it's urgent