transition rules

Yes...exactly. He can claim only upto 40% of credit

so he will be claiming 40% for ED and 100% for VAT

Yes... Conceptually

suppose one more scenario if I had purchased a material interstate which was charged with CST earlier I could not take the credit for that

but now in get transition rule if I on submitting the invoices of CST charged can I take the 40% credit ??

As earlier also you were not able to take the credit of CST so here in this case also credit pertaining to GST may also not get passed on. As far as the credit of excise duty involved if the dealer is registered under excise than he can take​ the credit fully by showing all the docs and if he is not registered in that case dealer can take the credit upto 40% only.