cenvat credit

This query is : Resolved

anil kumar jain (Querist)
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04 July 2011 A company is having two excisable units.

Unit I is manufacturing goods partialy exempted, namely coir mattresses.
These goods are cleared for home consumption and basic excise duty is paid @1% ad volerum.The unit does not avail cenvat credit.

Unit II is manufacturing goods which are not exempted and hence paying duty at full rate and also avail cenvat credit.

Unit I transfer goods to unit II and pays duty @ 1% as applicable.

Now Unit II whishes to avail cenvat credit of such goods.

To my opinion the cenvat credit is permissible.

But the range officers deny the credit.

Now my quarry is under what rule the cenvat credit is not allowable, if so.

S.P.Mahanta

S.P.Mahanta (Expert)
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05 July 2011 Under notification no 1 dt 1.03.2011, no cenvat credit is available on goods removed covered under said notification.

anil kumar jain

anil kumar jain (Querist)
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05 July 2011 My querry is whether cenvat credit is available of such goods to the other user of such goods

My emphasis is on "of such goods".

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S.P.Mahanta

S.P.Mahanta (Expert)
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13 July 2011 Basic rule for cenvat credit is,credit is available to manufacturer or service provider only on duty paid goods whether manufactured or as such goods. In referred case, in my opinion no cenvat credit available to Unit-II.

anil kumar jain

anil kumar jain (Querist)
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15 July 2011 Sir,Thanks for your guidance and support.
However, I may share with you that in fact a new proviso has since been added to CENVAT Rules whereby it has specifically been provided that no credit available on goods cleared under Notfn. 1/2011. That is why the credit is not availabe.

CA Suresh Jain

CA Suresh Jain (Expert)
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24 July 2011 You are right. I reproduce the relevant portion of Rule 4 of the Cenvat Credit Rules. 2004

RULE 3. CENVAT credit. — (1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -

(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act;

[Provided that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods in respect of which the benefit of an exemption under notification No. 1/2011-C.E., dated the 1st March, 2011 is availed;]