Cenvat on goods purchased

 

Please guide,
XYZ Pvt ltd. Co. manufacturing concern,
-They have two unit .No. I and No. II.
-Unit I receives inputs and removes as such that inputs to unit II...
-Then Unit II avails the cenvat on those inputs and uses those inputs for
manufacturing the finished goods.
-These finished goods are sold to unit I by Unit II by paying the excise duty...
-On receipt of these goods in unit I , they avail the cenvat credit on these
goods... and do a direct sale to the customer . without any further processing.
so my question is whether unit I is availing irregular cenvat credit ... as the goods
are not input for themm.. they are only doing trading.
Sir kindly give me the reply
Replies (2)

Unit I can not avail Credit. As you mentioned its just doing trading business and no manufacturing.

Unit 2 is carrying manufacturing activity . It is eligible for credit but there should be proper invoice also . Therefore Unit 1 should issue proper excise invoice to unit 2 so that unit 2 could claim credit.

Unit 1 is directly selling to customer therefore they must issue proper invoice to customer so that they could claim the credit . That being said both the units should be registered. Unit 1 could be said as First stage dealer.

Unit I can not avail Credit. As you mentioned its just doing trading business and no manufacturing.

Unit 2 is carrying manufacturing activity . It is eligible for credit but there should be proper invoice also . Therefore Unit 1 should issue proper excise invoice to unit 2 so that unit 2 could claim credit.

Unit 1 is directly selling to customer therefore they must issue proper invoice to customer so that they could claim the credit . That being said both the units should be registered. Unit 1 could be said as First stage dealer.

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