Cenvat credit

This query is : Resolved

Naman Munjal (Querist)
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03 February 2016 my querry is regarding cenvat credit, illustrated in the following example :-

A is an exsice registered manufacturer (vendor raw material)

B is an unregistered manufacturer ( finished goods)

C is an excise registered customer of finished goods.

B buys raw material from A and mentions himself as the buyer and C as the consignor of the raw material purchased as inputs. Now B processes those inputs and produces finished good and sells it to C by issuying him a VAT invoice and also gives him a copy of A's bill to avail the excise duty credit.

Can C avail the excise duty credit of the raw material purchased by B by mentioning his excise details as consignor.

Is it possible??

Regards,

Er. Naman Munjal

rakesh tiwari

rakesh tiwari (Expert)
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03 February 2016 No, C can't avail the credit as B has to be a first stage dealer to pass on the credit of Excise duty charged by A and if B is manufacturing the goods then he must have excise registration and avail the credit of ED paid to A on purchase of raw material from A and then charge C on sale of manufactured goods then C can avail the credit but in your case study credit is not available to C.

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 February 2016 "C" can avail CENVAT credit by following the job work procedure. "A" should raise the invoice on "C". "C" should intimate the department for getting the job work done from "B" and declare that he is responsible for payment of excise duty on job work carried out by "B".
The raw material can be delivered directly to the job worker's premises ("B"). "B" will carry out the process of converting the raw material to finished goods and send to "C" along with invoice for job work charges.

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Naman Munjal

Naman Munjal (Querist)
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03 February 2016 Thank You...
What if B trades the raw material to C.

Can C avail the benefit of the raw material, when B is only the trader of goods?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 February 2016 If "B" purchases the raw material from "A" & then sells to "C", then "B" CANNOT pass on CENVAT credit because he is not a manufacturer or First/ Second Stage Dealer. "B" should get himself registered as FSD or SSD to pass on the CENVAT credit.