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CENVAT Credit concept

Ashish Saini (Self Employed at Ashish Saini & Associates) (180 Points)

21 December 2010

Please Reply to....An Organisation having 2 units , one is manufacturing concern and the another is Ltd. Co. Which deals in trading activity. Manufacturing concern purchases goods from local and Inter State purchase on which it pays excise duty and Sales to it to its another unit i.e. Trading Concern and also to others.

Now my problem is ...Can manufacturing concering avail the CENVAT credit on sale to its Trading concern and also to Others?

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3 Replies

Deviprasad G.K. (Consultant) (35 Points)
Replied 21 December 2010

Originally posted by : ashish

Hi Ashish,

In your query you asked that whether the manufacturer can avial the Cenvat Credit on saererles to its another unit and also to others.

Donot get confused with the Cenvat Credit Rules, He cannot avail the Cenvat Credit on sales but he can avail the Cenvat Credit on the purchases made local, interstate and also imported rawmaterials and whatever Central Excise duty paid by him for his purchases he can fully avail the Cenvat Credit.

In your case for example, in the month of November if your manufacturer purchased a Rawmaterial local or interstate of Rs 2,00,000/- for this Central Excise Duty will be Rs 20,600/-. By using this rawmaterial he prepared the finished goods i.e Final Product and removed this final product from his premises under the central excise invoice to his trading co or to others. The value of final product will be sum of Rs 3,00,000/- for this the Central excise duty will be Rs 30,900/-.

Here the Central Excise Duty payable for the month of November before 5th 0f December will be Rs 10,300/- (Rs30,900 - Rs 20,600)

Regards

Deviprasad G.K

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U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 December 2010

Originally posted by : ashish
	Please Reply to....An Organisation having 2 units , one is manufacturing concern and the another is Ltd. Co. Which deals in trading activity. Manufacturing concern purchases goods from local and Inter State purchase on which it pays excise duty and Sales to it to its another unit i.e. Trading Concern and also to others. Now my problem is ...Can manufacturing concering avail the CENVAT credit on sale to its Trading concern and also to Others?

Cenvat credit has no bar for manufacturing concerns, provided they pay duty from 1st clerance of finance year,

sale to sister concern engaged in trading activity - please ensure the invoice value confirming to sec 4, otherwise it will attract some litigation of concealment of value under "sales to related persons"