how to pass cenvat credit to customer

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 October 2010 We are Trading concern (excise Registered).

While selling the products our customer wants the CENVAT benefit to be passed on to them. So please guide me what are procedures to be done to pass on CENVAT credit to the customer. Also let me know the procedure for Purchase and Sale of the same and the documents required while purchase and sale.

We purchase IT hardware products from our distributor . He is not ready to give us Excisable Invoice. So in that case what is the other alternative.

Correct me if i am wrong in understanding.

As we are the trader we can avail and pass out the CENVAT credit to our customers only if:

1. We purchase from the vendor who gives us Exciseable invoice.
2. Or we Import directly where in the Bill of entry should be in our name. Right

Documents Required

What are the documents required when we purchase and what are documents which are to be given to our customer while we prepare Sales Invoice.

Purchase Invoice

While Purhcase we get a Invoice of say eg Product is for Rs. 100/- and Duty paid is Rs. 15/- so Total Landed cost will be Rs. 115/-

Accounting Entries will be as follows right:

Purchase Account Dr Rs. 100/-
CENVAT Dr Rs. 15/-
Party Cr 115/-

Sales Invoice

While prearing Sales Invoice whether we need add Duty

For Eg. Product is for 110/- (our margin of Rs. 10/-)
CENVAT Rs. 15/-
VAT 4% Rs. 5/-
So Total Rs. 130/- am I right or we should not include CENVAT of Rs. 15/-

Accounting Entries will be as follows right:

Sales A/c Cr 110/- Rs
CENVAT A/c Cr 15/- Rs
VAT A/c Cr 5/- Rs
Customer Dr 130/- Rs

After preparing Sales Invoice whether we need to pay Rs. 15/- to the Excise department?

Please clarify whether what I have understood is correct.

S. Banerjee

S. Banerjee (Expert)
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25 October 2010 You have not mentioned that whether you have been registered under Central Excise or not as a DEALER. If you are a dealer then only you can pass on the duty to your buyer.
so far as dcoument concern in case of indegenious you are to collect C. Ex Invoice from your buyer and in case of import Bill of entry is required for pass on the credit.
Acccounting treatment which you have mentioned it is applicable for MANUFACTURER only.
Thanks, S. Banerjee