Rajkumar Sutar (Accountant) (57 Points)
15 December 2009Hello,
I want to know the rule of Cenvat Credit in below transaction:
Co. Y has purchased material from Co. X but material directly has been delivered to Co. Z as Co. Y raised the Sale Invoice of the same material to Co. Z.
In this case can Co. Y is eligible to take the Cenvat Credit on purchase from Co. X ????
Please Advice.
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 15 December 2009
Y is not eligibal for cenvat credit because he is not geting material only he will issue commercial invoice for wonership transfer
Rajkumar Sutar
(Accountant)
(57 Points)
Replied 15 December 2009
| Originally posted by :Ram Avtar Singh | ||
| " | Y is not eligibal for cenvat credit because he is not geting material only he will issue commercial invoice for wonership transfer | " |
Thank you Mr. R.A.Singh, X has charged the Excise Duty to Y and Y has charged the duty to Z. In this case Z can take credit of duty charged by Y but Y can not take the credit of duty charged by X, this is what your explanation I understood. Does this mean that duty paid by Y to X is loss of Y ??? also, could you please advice that which section/rule should I refer for this transaction.
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 15 December 2009
Excise benifit pass on directly to Z.
X charged duty and pass on to consignee Z because he has mentioned in his Bill Consignee Name and Buyer Name(Y) also.
Z will keep Modvate copy of X for cenvat credit.
X will only charged his profit & vat / CST on commercial invoice. no need to mention Excise duty.
This transaction is ( sales in transit.)
Rajkumar Sutar
(Accountant)
(57 Points)
Replied 15 December 2009
Yes, this is sale in transit. But Sir, X has charged Excise Duty in his invoice as they have to load the duty thereon. Is still Y will not take credit of duty??? There is twice duty been loaded on the same material... one by X and another by Y. Please help us.
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 15 December 2009
1. A registered person places an order on a manufacturer for supply and delivery of goods directly to a consumer and the goods are accordingly transported from the manufacturer's premises to the user's premises without being brought to the registered person's premises. In such a situation manufacturer will issue an invoice under Rule 52A. This invoice under Rule 52A will contain, in addition to the prescribed details including the consignee's name and address, mentioned therein, the registered person's name and address, on account of whose instructions the goods have been dispatched. The consignee in this case will be the end user. In such a situation the registered person's invoice is not repaired for avaliment of Modvat credit. The duplicate copy of the manufacturer's invoice under Rule 52A will serve as cover for transport and for avaliment of MODVAT by the end user.
2. In case the goods have been consigned directly by the manufacturer to the consignee/ end user under the instructions of the registered person and the end user refuses to receive the goods, then the registered person could approach the Range Superintendent of the original consignee. The Range Superintendent on receipt of request from the registered person can divert the consignment to a new destination as requested by the registered person. The duplication and triplicate copy of the manufacturer's invoice will be endorsed by the Range Superintendent showing new destination.
3. A registered person, say in Bombay, places an order on a manufacturer, say in Madras for supply of goods at Ahmedabad without being definite in advance as to who his buyer in or around Ahmedabad would be. The order has been placed in anticipation of the demand. The goods are delivered and stored in a godown. The registered person would be required to register himself at Ahmedabad and issued invoices under Rule 57G.
Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14497 Points)
Replied 15 December 2009
| Originally posted by :Rajkumar Sutar | ||
| " | Yes, this is sale in transit. But Sir, X has charged Excise Duty in his invoice as they have to load the duty thereon. Is still Y will not take credit of duty??? There is twice duty been loaded on the same material... one by X and another by Y. Please help us. | " |
X Duplicate Invoice for cenvat credit to be keep with Z and utilized duty on that bill on behalf of Ybecause both party name mentioned in Bill.
Y will not charged sepret duty. its a hiden part. Z will claim duty from X invoice on behalf of you.
No double duty burden.
Rajkumar Sutar
(Accountant)
(57 Points)
Replied 15 December 2009
Thank you very much Sir for your instant and kind assistance/co-operation. Now I got it.
It is said very clear in the above notification that manufacturer (Co.X) should not load the Excise duty on the material. Although Co.X (manufacturer) and Co.Y (registered person) has loaded duty on it. What will you advice on such transaction.....???? Should Co.X has to change his invoice??? or way another????
Bharat Khurana
(Student)
(153 Points)
Replied 19 December 2009
no cenvat credit in respect of inputs is available on receipt of input in the factory of premises of service provider. so cenvat credit to co. y shall not be available
Reetika Goel
(Qualified Chartered Accountant)
(565 Points)
Replied 20 December 2009
The circular quoted by Mr. Ram Avtar Singh is very old one.
After that, the whole Cenvat Credit Rules were amended and the new rules state as under:
The Input Cenvat can be booked only on receipt of goods in the factory. If goods are not received in factory then, the purchaser cann't book CENVAT in his books. Accordingly, Co.Y cann't book CENVAT in its books.
Secondly, Since goods are transported by Co.X directly to Co. Z on consignment made by Co. Y, Co. Y shall issue its invoice on which it shall mention the original manufacturer & the excise duty paid/payable to him and then forward this Excise Invoice to Co. Y which shall allow Co. Y to take credit.
The case would have been similar had, Co. Y received the goods in the factory & then removed them to Co.Y. But in that case, Co.Y could book the CENVAT in its books and at the time of removal it will have to pay duty equivalent to the CENVAT Booked under Rule 8 of CER' 2002.
For more clarity Refer Rule 4 & 5 of CCR' 2004 & Explanation to Rule 8 of CER' 2002.
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