CENVAT REFUND

This query is : Resolved

Amit Shah (Querist)
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07 August 2008 1) Dealer is a Pvt.Ltd. Co. engaged in producing automobile parts (both with material & on job-work basis). It sales major part of production to a EOU without levying CENVAT duty. And therefore it has CENVAT Credit balance of around Rs.12lakhs which is untilised since 2 years. And because of this fact now they are not taking credits of new machines purchased as they can at least claim depreciation on the duty for Income Tax purpose.

Whether we can claim this balance credit as refund and what procedure we should follow?

Rajesh Kumar

Rajesh Kumar (Expert)
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11 February 2009 Under Rule 5 of the Cenvat Credit Rules, refund of accumulated credit is allowed only in cases of export. Supply to EoU is not export, and hence refund is not permissible.
However, supply to EoU can be done on payment of duty and the EoU can take credit of that duty paid.