Cenvat credit

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Nitesh Agarwal (Querist)
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13 January 2014 Mr. A is sub vendor. Mr. B is Vendor. Mr. P gave a order to Mr. B for a machine.

Mr B purchase the same from Mr A and sand it to Mr p through E-1 transaction.

Mr A make a bill, in the name of Mr B (Consignee Mr P), of Rs.100000/- charge excise duty @12.36%.

Mr B raise commercial Bill of Rs. 80000/-.

Now Quistion is how much CENVAT Mr P avail in which Rule ?

If not understand my point than please mail me tocaniteshagarwal@gmail.com or Contact me on 9460546772

Arun Kumar Singh

Arun Kumar Singh (Expert)
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13 January 2014 If duty is paid on the whole goods then can buyer can take the 100% cenvat credit on the basis of invoice.

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Nitesh Agarwal

Nitesh Agarwal (Querist)
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14 January 2014 Under which rule sir ?

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Arun Kumar Singh

Arun Kumar Singh (Expert)
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14 January 2014 The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of invoice of manufacturer from factory or from his depot or premises of consignment agent, invoice issued by registered dealer, supplementary invoice by manufacturer, bill of entry etc under rule 9(1) of cenvat credit rules 2004.

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Nitesh Agarwal

Nitesh Agarwal (Querist)
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16 January 2014 In continuation to earlier question; please provide that if Mr. P (Purchaser) Order Value is Rs. 80,000/- & accordingly the excise amount will be Rs. 9888/- only
Whereas Mr. B(Vendor) has invoiced by passing the value of Mr. A i.e. Rs. 12360/-

Whether the Mr. P is liable to pay the extra amount of excise.

The above amount is cenvatable,then ok, if not cenvatable then what to do.

The same question is also applicable on CST amount.

Kindly Reply at the earliest.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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19 July 2024 Based on the details provided, it seems there is a discrepancy between the order value and the invoiced amount. Let's address the excise duty and CST implications separately:

### Excise Duty Implication

1. **Order Value vs. Invoiced Amount:**
- **Order Value by Mr. P (Purchaser):** Rs. 80,000
- **Invoiced Amount by Mr. B (Vendor):** Rs. 12,360

2. **Excise Duty Calculation:**
- If the excise duty is applicable on the invoiced amount (Rs. 12,360), the calculated excise amount is Rs. 1,492 (assuming an excise duty rate of 12% which is common).

3. **Liability of Mr. P (Purchaser):**
- Mr. P is generally liable to pay the excise duty based on the invoiced amount (Rs. 12,360), provided that:
- The invoiced amount reflects the correct valuation as per the excise rules.
- The vendor (Mr. B) is registered under Central Excise and has correctly charged and collected the excise duty on the invoiced amount.

4. **Cenvat Credit:**
- If Mr. P is eligible for Cenvat credit, he can offset the excise duty paid on purchases (based on the invoiced amount) against his output liability when he sells the goods further.

### CST (Central Sales Tax) Implication

1. **CST Calculation:**
- CST is applicable when goods are sold from one state to another (inter-state sales).
- The rate of CST depends on whether the transaction is against a Form C (at concessional rate) or not (at higher rate).

2. **Liability of Mr. P (Purchaser):**
- Similar to excise duty, Mr. P may be liable to pay CST on the invoiced amount of Rs. 12,360 if the goods are being purchased for inter-state sale.
- The CST rate will depend on whether Form C is applicable or not.

3. **Documentary Requirements:**
- Mr. P should ensure that proper documents like invoices, delivery challans, and relevant forms (like Form C for concessional CST rate) are obtained from Mr. B to comply with CST regulations.

### Action Steps

1. **Verification of Invoiced Amount:**
- Mr. P should verify why the invoiced amount (Rs. 12,360) is higher than the order value (Rs. 80,000).
- Ensure that the invoiced amount includes all applicable taxes (like excise duty and CST) and that Mr. B has correctly calculated and charged these taxes.

2. **Compliance and Documentation:**
- Ensure all tax liabilities are correctly accounted for and paid based on the invoiced amount.
- Maintain proper documentation including invoices, tax payment receipts, and Cenvat credit records.

3. **Consultation:**
- If there are uncertainties or discrepancies, it's advisable to consult with a tax expert or Chartered Accountant who can provide specific guidance based on the exact nature of the transaction and applicable tax laws.

By following these steps, Mr. P can ensure compliance with excise duty and CST regulations while managing tax liabilities effectively.