20 August 2010
Rule 3(5C) says that Where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under rule 21 of the Central Excise Rules, 2002, the CENVAT credit taken on the inputs used in the manufacture or production of said goods shall be reversed. Excise is levied on manufacture of Finished goods but collected on removal of such goods from the factory. For Example if the finished goods is destroyed in the godown of the manufacturer and the duty payable on removal of the goods is remitted or in other words not required to be paid , then the manufacture is not allowed/eligible to take the credit for the duty paid on the Inputs consumed in manufacture of such finished goods which is destroyed
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