How to avail CENVAT Credit and pass on to our customer

7844 views 7 replies

Bhavesh

Accountant

49 Points Joined December 2008

We are IT Infrastructure Service Provider based out of Mumbai.

We are into selling of IT products. 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 (who in turn imports it). 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.

Regards
Bhavesh Thakar - Mumbai
9322401890

Replies (7)

Shantanu

Service

27 Points Joined December 2008

Dear Bhavesh

Since you are a trader you are supoosed to just pass on the Cenvat to your cutomer.

For passing Cenvat you should have

Purchase invoice ( where on the Amount of Excise Duty should be mentioned seperately)

Then only You can Include this amount in your Sales Invoice to pass the same to your cutomer.

Regards

Shantanu

Originally posted by :Bhavesh

We are IT Infrastructure Service Provider based out of Mumbai.
We are into selling of IT products. 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 (who in turn imports it). 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.

Regards
Bhavesh Thakar - Mumbai
9322401890

RAJESH PREMJI GAJRA

SERVICE

20 Points Joined December 2008

WE ARE MOBILE TELECOMMUNICATION TOWER STRUCTURES MANUFACTURING CO IN KRUSHNOOR(MAHARASHTRA) INDIA. OUR EXCISE REGISTRATION IS FROM 19 NOV 2008. WE HAVE SOME PURCHASES OF INPUTS/RAW MATERAIL WHICH ARE EXCISABLE INVOICES WHICH WE ARE PURCHASED BEFORE OUR REGISTRATION DATE.I.E IN THE MONTH OF SEPTEMBER AND OCTOBER RESPECTIVELY AND OUR ECC REG IS WEF 19 NOV 2008. CAN WE GET THE CENVAT CREDIT FOR THE PURCHASES OF INPUTS/ RAW MATERIALS WHICH WE PURCHASED BEFORE REG DATE. CAN WE GET THE CENVAT FOR THE SAME.

RAJESH PREMJI GAJRA

SERVICE

20 Points Joined December 2008

RAJESH PREMJI GAJRA

SERVICE

20 Points Joined December 2008

Pavan Jain S

Chartered Accountant

1575 Points Joined December 2008

A central excise assessee can pass on the cenvat credit only and only if he is a ;

Manufacturer of excisable goods
Importer registered under the CE Act
First Stage or Second Stage dealer registered as such under the CA Act.

In other cases, a purchaser of xcisable goods cannot pass the cenvat credit. Instead, he has to include the excise duty so paid by him as a part of purchase cost.

In the present case, since you are a trader and are not registered a I stage or II stage dealer, you are not entitled to issue cenvatable invoices.

Rajesh Kumar

Advocate- Tax

7811 Points Joined December 2008

Answering query of Rajesh-

You are eligible for taking Cenvat on all the material in stock in your unit on the date you took the registration.

Namo Narayan Khaware

Sr. Accountant

22 Points Joined February 2011

From Namo Narayan

Sir,

One manufacturer can bill raise excise invoice with excise tax, Edu. cess and H/E Cess without Gross sales value 1.50Crore and Cenvat avail in purchase invoice.