Charging addl duty by a manufacturer

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Dattatri

Tax consultant

61 Points Posted on 21 December 2015

We are registered under central excise as manufacturers and purchased 1 motor from a registered manufacturers. Now I have a doubt on this transaction (copy of our purchase bill is enclosed)

Can a manufacturer registered under excise sell the input (imported) items (as is sale) under manufacturing bill without taking dealer registration?
Can a manufacturer charge addl duty @ 4% (on basic+ed+cess) in his bill for the input items sold by him? Even though the items sold is imported by him, but since he is not a dealer, (he is a manufacturer) how can he charge 4% addl duty?
Also the Addl duty has been charged is 4% on the assbl value + ed+ ed cess. Normally a dealer is passing on the Add duty only to the extent of what ever the Addl duty paid by him on the product at the time of import. Isn’t it sir?

Kindly provide me the feedback

Replies (2)

Shrikant Rathi

Practicing Chartered Accountant

42 Points Posted on 21 December 2015

As per Rule 3(5) of CENVAT Credit Rules, 2004, at the time of as such removal of input, a manufacturer is required to reverse the CENVAT credit availed in respect of such inputs. Such reversal is undertaken under the cover of excise invoice wherein the duty amounts are also shown separately. Basis such invoice, the buyer of such inputs can avail CENVAT credit. There is no need for the manufacturer to obtain dealers registration for undertaking such transaction.

Madhukar N Hiregange

Chartered Accountant

33545 Points Posted on 22 December 2015

The imported inputs can be removed as such on reversla of the duty credit availed. Tghis would include the additional duty of cusotms ( CVD) and Special additional duty (SAD). Under 3(5) both can be shown and receiver can avail credit if eleigible. Need not be registered as importer.

Chargoing 12.5% + 4% on the selling price of the input is not correct. There is a need to reverse the actual duty. However Tribunals have held that when the duty has been paid on higher amount and accepted as duty then the credit cannot be denied. ( this stand maybe disputed)

However if the item being traded is not an INPUT then registration as importer is necessary to pass on the credit.