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CENVAT Credit concept


Ashish Saini (Self Employed at Ashish Saini & Associates)     21 December 2010

Ashish Saini
Self Employed at Ashish Saini & Associates 
 3 likes  172 points

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Please Reply to....An Organisation having 2 units , one is manufacturing concern and the another is Ltd. Co. Which deals in trading activity. Manufacturing concern purchases goods from local and Inter State purchase on which  it pays excise duty and  Sales to it to its another unit i.e. Trading Concern and also to others.

Now my problem is ...Can manufacturing concering avail the CENVAT credit on sale to its Trading concern and also to Others?

Deviprasad G.K. (Consultant)     21 December 2010

Deviprasad G.K.
Consultant 
 1 likes  35 points

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Originally posted by : ashish


Please Reply to....An Organisation having 2 units , one is manufacturing concern and the another is Ltd. Co. Which deals in trading activity. Manufacturing concern purchases goods from local and Inter State purchase on which  it pays excise duty and  Sales to it to its another unit i.e. Trading Concern and also to others.

Now my problem is ...Can manufacturing concering avail the CENVAT credit on sale to its Trading concern and also to Others?

 

Hi Ashish,

In your query you asked that whether the manufacturer can avial the Cenvat Credit on saererles to its another unit and also to others.

Donot get confused with the Cenvat Credit Rules, He cannot avail the Cenvat Credit on sales but he can avail the Cenvat Credit on the purchases made local, interstate and also imported rawmaterials and whatever Central Excise duty paid by him for his purchases he can fully avail the Cenvat Credit.

In your case for example, in the month of November if your manufacturer purchased a Rawmaterial local or interstate of Rs 2,00,000/- for this Central Excise Duty will be Rs 20,600/-. By using this rawmaterial he prepared the finished goods i.e Final Product and removed this final product from his premises under the central excise invoice to his trading co or to others. The value of final product will be sum of Rs 3,00,000/- for this the Central excise duty will be Rs 30,900/-.

Here the Central Excise Duty payable for the month of November before 5th 0f December will be Rs 10,300/- (Rs30,900 - Rs 20,600)

 

Regards

Deviprasad G.K  

avater

U S Sharma (glidor@gmail.com)     21 December 2010

U S Sharma
glidor@gmail.com 
 1739 likes  21021 points

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Originally posted by : ashish

Please Reply to....An Organisation having 2 units , one is manufacturing concern and the another is Ltd. Co. Which deals in trading activity. Manufacturing concern purchases goods from local and Inter State purchase on which  it pays excise duty and  Sales to it to its another unit i.e. Trading Concern and also to others.

Now my problem is ...Can manufacturing concering avail the CENVAT credit on sale to its Trading concern and also to Others?

Cenvat credit has no bar for manufacturing concerns, provided they pay duty from 1st clerance of finance year, 

 

sale to sister concern engaged in trading activity - please ensure the invoice value confirming to sec 4, otherwise it will attract some litigation of concealment of value under "sales to related persons" 

avater

Ashish Saini (Self Employed at Ashish Saini & Associates)     21 December 2010

Ashish Saini
Self Employed at Ashish Saini & Associates 
 3 likes  172 points

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Thanks a lot !


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