Cenvat credit on capital goods

visit the commissionarate office, and ask him to endorse the invoices issued in favor of the target receipent unit.

alternate, 

get registered as excise dealer and issue cenvatable invoice 

Thanks Mr. Sharma for your early reply.

In case we follow the first option, will the recepient unit be allowed the Cenvat Credit on Capital Goods. The recepient unit is a subsidiary company of our Company. Capital goods were never used in the factory and were recorded as Capital Work in Progress.

We had applied for registration in past but the department had denied registration on the ground that as the unit is not liable to pay excise duty registration is not required. My knowledge says that as per Central Excise Rules & other provisions every manufacturer of excisable goods can get itself registered with the department and area based exemption does not make goods non exciseable. So in my opinion denying registration too is not proper.

I had suggested my seniors the second option suggested by you, then only I got to know about the fact of denial of registration.

Please suggest further in the light of above facts.

Even if you get manufacturer registration, you cannot pass on credit becasue only a validly taken credit can be passed on by manufacturer. Credit of wholly exempted unit is invalid hence it's passing on may also be invalid. I also feel that dealer registration may be sought. 
 

Perhaps the goods are also exempted from CETA in your case, as under area based exempted units held by any assesee who have other taxable units under same constitution, registration is granted and returns has to be submitted under form A (Link below),

https://www.cbec.gov.in/excise/cx-forms/area-based-exemptn.pdf

sometimes the Junior officers of department dont bother to guide the assessee on their own interpretations, but at later stage when audit is conducted, the assessee feels the pain of accepting the personal views of such officers, so always communicate with department in such cases in writing, and take dated acknowledgement, and replies also in writing to avoid any unpleasent situation in future.

if you have doubts about your transactions then visit the commissionarate office ( in place of division office) and take their guidelines, this will help you to get updated with the clear rules and acts.

Dear Mr. Prabhat Gupta

Excise Deptt is correct at his point, the companies who are availing the area based exemption need not to register in excise. Secondly the cleareance of such comes under category of " input/capital goods such as cleared" . Athough it is also correct that exempted copanies can not pass on the credit because, such unit can not avail the credit or can not pass on the credit.

In this case I have a suggestion:

Exempted unit will issue a invoice to recipient unit enclosing the endoresed copy of purchase invoice . On that reciepient unit can avail the cenvat credit on reduced valuation. Cenvat so availed can not be denied.

Regards

HS Negi.