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CENVAT Credit on Imported goods ... reply soon

deepa (CA Final ) (62 Points)

05 July 2010

Hi can any one clear my boubt.

One of our client is a subsidary of foreign co. which is a unit of fluid energy control. Indian subsidary company will import the products from holding co (abroad) for selling in INDIA after paying all applicable duties.

the doubt is there are 3 scenarios

1. Goods imported from Holding company sold in INDIA without further processing

2.Goods imported from Holding company has been further processed in INDIA and then sold.

3. Goods imported from Holding co. has been given to Job Worker for further processing and then sold off.

In the 3 situations how can the co. avail CENVAT credit, which duites they can avail as credit and do they need separate registration for carrying out above mentioned process (i.e 3 situations mentioned above)

Kindly clarify my doubt.

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14 Replies

Namita (Owner) (38 Points)
Replied 10 September 2010

Case 1: Cenvat credit of CVD paid under 3(1) is availlable and corresponding Edu cess and SAH Cess. Assesse needs to be registered with central excise. However since your client here is not manufacturer, he can only pass on the credit to another person who can use it to pay duty on final product/output services.

Case 2: Cenvat credit of CVD paid under 3(1) is availlable and corresponding Edu cess and SAH Cess. Assesse needs to be registered with central excise. He can use it to pay duty on final product/output services.

Case 3: In this case also, Cenvat credit of CVD paid under 3(1) is availlable and corresponding Edu cess and SAH Cess. Assesse needs to be registered with central excise. He can use it to pay duty on final product/output services.

C.V.R.SARMA (SERVICE) (90 Points)
Replied 11 September 2010

In the first case, you are importing the goods from your parent company abroad and selling them to local customers. In such a case, you are acting as a trader. Then you have to get registered as a Dealer under Central Excise. Then only you can pass on the credit to the customers.

In the second case, you are acting as a manufacturer. In such a case, you should get registered as a manufacturer. Get the imported inputs, complete the manufacturing activity, avail the credit on the inputs and clear the goods on payment of duty on the value addition after availing the set-off the input credit.

In the third case, you are sending the inputs to the job worer. Two situations arises here, one is sending the inputs to the job worker, processing to them to the semifinished stage and get back them to your premises and completing the remaining process and clearing them on payment of duty. In the second case, you can ask the job worker to manufacture the goods completely and clear them on payment of duty from his premises. While the former needs no permission, the later needs the permission from the JAC in terms of Rule 4(6) of Cenvat credit rules,2004.

As regards to the availment of credit, on all the imported inputs, you can take the cenvat credit of CVD, CVD EC and CVD secondary cess, 4% SAD ( Special additional duty of customs).

1 Like

Nithya (Accountant) (21 Points)
Replied 29 October 2010

hi pls clarify my doubt

we are a trader .whether we can avail refund of CVD & BCD on goods imported

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 30 October 2010

If you are exporting then ONLY you can get the refund

2 Like

Ankit Agarwal (Accountant) (32 Points)
Replied 09 November 2010

I have a similiar situation/predicament. We are registered as dealers in excise. We import goods, pay 10%CVD, 4% SAD and sell to manufacturers (excisable invoice). But we are able to pass only CVD (as excise duty) and not SAD, as we have to charge VAT which we have to pay to sales tax dept.

Eg: Import CIF:100/-......CVD paid:10/-......SAD paid:4/-(approx).

Excise invoice:100+10(excise duty)+4(VAT)=114/-. Now this VAT is collected and paid to sales tax. We only passed Rs.10(as excise) out of Rs.14 paid to customs. We Or am I making a mistake in invoicing?

I am having a tough time solving this. Any information/help appreciated.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 November 2010

dealers are not eligible to claim /pass SAD, this facility goes to manufacturer importer only.

Ankit Agarwal (Accountant) (32 Points)
Replied 10 November 2010

So the importer dealers are at a disadvantageous position and there is cascading tax as we are paying both SAD and local VAT/CST?

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 November 2010

local vat / cst is same for both manufacturer / dealer as the manufacturer does not have to resale it, its non existance instance unless its processed/ manufactured, but the trader has to ........

regarding Special Additional Duty, the same can be claimed by direct manufacturer - importer only,

Prabhat Kumar (Advocate & Consultant) (1912 Points)
Replied 11 November 2010

Cenvat Credit is a facility given to the manufacturer to save him from the cascading effect of Indirect Taxation. It can be availed only when the product you import is an input for the final product and the process you do amounts to manufacture. So, in situation 1, No question of Cenvat Credit. In Situation 2 and 3, it can be availed if the process amount to manufacture and the goods imported is an input to the final product.

R P Ananthakumar (Sr. Officer - Central Excise/Cash) (514 Points)
Replied 17 November 2010

You can choose 2 or 3, that the both come under manufacturing activity. You can claim CVD E.CEss and AED.

Ankit Agarwal (Accountant) (32 Points)
Replied 05 February 2013

Sir,

We are importers of steel registered as dealers in excise and no service tax registration. We import steel, do customs clearance and then sell them on local sales (VAT) to our customers and pass all the customs/countervailing duty. BUt we are not passing on the service tax that we are paying while customs clearance which is a significant amount. Can you guide us how to pass the service tax as well? We can register with service tax department if needed.

Thanks,

Ankit

9849064552

ankitvirgo @ gmail.com

Amol Jadhav (B.Com) (21 Points)
Replied 07 July 2015

Hi,

Cenvat Credit on CVD + SAD on imported goods

We are importer finished goods on MRP & selling after market to dealer without any processing.

also dealer dosent have excise registration.

my question is can we take credit on CVD + SAD on import goods?

Pls reply me.

ABHINANDAN JAIN (CA Student) (891 Points)
Replied 23 July 2016

Can a manufacturer avail the credit of CVD 3(1) if it purchases from importer trader. since importer is not a manufacturer, can he pass on the credit of cvd to us...?