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    What Is CENVAT Credit?

    Uploaded by

    Sameer Husain
    Cenvat credit allows manufacturers and service providers to claim a credit for excise and customs duties paid on inputs. It can be claimed on inputs, capital goods, and input services. Credit can only be claimed if the final goods or services are dutiable, and not exempted. Manufacturers making both dutiable and exempted goods must maintain separate accounts and can only claim credit in the same proportion. Credit must be used to pay excise duty on final products. Proper records and documents must be maintained to claim credit. Monthly, quarterly, and half-yearly returns must be filed by different registered parties.

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    What Is CENVAT Credit?

    Uploaded by

    Sameer Husain
    14 views8 pages
    Cenvat credit allows manufacturers and service providers to claim a credit for excise and customs duties paid on inputs. It can be claimed on inputs, capital goods, and input services. Credit can only be claimed if the final goods or services are dutiable, and not exempted. Manufacturers making both dutiable and exempted goods must maintain separate accounts and can only claim credit in the same proportion. Credit must be used to pay excise duty on final products. Proper records and documents must be maintained to claim credit. Monthly, quarterly, and half-yearly returns must be filed by different registered parties.

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    Cenvat credit allows manufacturers and service providers to claim a credit for excise and customs duties paid on inputs. It can be claimed on inputs, capital goods, and input services. Credit can only be claimed if the final goods or services are dutiable, and not exempted. Manufacturers making both dutiable and exempted goods must maintain separate accounts and can only claim credit in the same proportion. Credit must be used to pay excise duty on final products. Proper records and documents must be maintained to claim credit. Monthly, quarterly, and half-yearly returns must be filed by different registered parties.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    14 views8 pages

    What Is CENVAT Credit?

    Uploaded by

    Sameer Husain
    Cenvat credit allows manufacturers and service providers to claim a credit for excise and customs duties paid on inputs. It can be claimed on inputs, capital goods, and input services. Credit can only be claimed if the final goods or services are dutiable, and not exempted. Manufacturers making both dutiable and exempted goods must maintain separate accounts and can only claim credit in the same proportion. Credit must be used to pay excise duty on final products. Proper records and documents must be maintained to claim credit. Monthly, quarterly, and half-yearly returns must be filed by different registered parties.

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    Cenvat Credit

    What is CENVAT Credit?

    Cenvat Credit is a scheme where the manufacturers or the output service providers are allowed a set off

    How does it work?

    In the manufacture of product X, if raw material A and raw material B are used, the manufacturer is allow

    Can the Cenvat Credit be availed on capital goods also?

    Yes. Cenvat Credit can be availed on capital goods also. But the credit should be taken in installments. 5 For Capital goods receive

    For taking the credit on the inputs or capital goods, is it mandatory that the goods should be dire

    Not always. The goods can also be procured from the dealers who are registered with the Central Excise

    1/8

    Cenvat Credit

    What are the inputs eligible for taking the credit?

    All goods, except light diesel oil, high speed diesel oil and motor spirit (petrol) which are used in or in rela

    What are the capital goods eligible for credit?

    The list of eligible capital goods has been provided in the Cenvat Credit rules 2004( for e.g., goods falling

    If these capital goods are used in the factory of the manufacturer, the credit can be availed.

    Can the service tax paid also be availed as credit?

    Yes. From 10.9.2004, Cenvat Credit has been extended across goods and services. This means a manu

    How do I know if a particular service is eligible for credit or not?

    2/8

    Cenvat Credit

    Like inputs, input services are also defined under the Cenvat Credit Rules 2004. If the service satisfies th

    Can input credit be taken if the final products/ out put service is exempted?

    No. Credit is not allowed if the final products are exempted or the output service is exempted.

    What if I manufacture both dutiable and exempted goods?

    If both exempted and dutiable products are manufactured, the assessee has two options. First one, he n

    Does the same ratio apply to service providers also?

    Yes

    3/8

    Cenvat Credit

    Any such restriction in case of capital goods?

    No. If the capital goods are used for both dutiable and exempted goods, full credit is allowed. Same is th

    Any special provisions relating to credit on capital goods?

    Yes. While availing credit on capital goods, the manufacturer shall not avail the depreciation on that part

    I am manufacturer. I pay the freight for outward transport and also pay the service tax under GTA

    Yes. Transportation of goods up to the place of removal is defined as input service in the Cenvat Credit r

    I am a small scale assessee availing exemption. I pay duty only after crossing Rs one crore. Am I

    Credit is not allowed upto the value of Rs one crore turnover. Only on crossing Rs one crore turn over, c

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    Cenvat Credit

    Can service tax paid at the head office be transferred to the manufacturing locations?

    Yes. The head office has to be registered as "Input Service Distributor" and can transfer the service tax p

    Is there any time limit for taking the credit?

    No. There is no time limit prescribed. But it is advisable to take credit in a reasonable time which was he

    What are the documents prescribed for taking credit?

    The list of prescribed documents is given at Rule 9 of the Cenvat Credit Rules 2004.

    Any statutory records are prescribed under the Cenvat Scheme?

    No statutory records are prescribed, but the assessee has to maintain records containing the information

    5/8

    Cenvat Credit

    Can the credit be availed on Education Cess also?

    Yes. Credit can be availed on Education cess also, but the credit can be used only for payment of educa

    Can the input or capital goods on which credit was already availed be cleared from the factory?

    Yes. The inputs or capital goods can be cleared from the factory on payment of an amount equal to the C

    Is the same logic applied if the capital goods are removed temporarily for repairs etc?

    If the capital goods or inputs as such or after being partially processed are sent to a job worker for furthe

    Can the inputs on which Cenvat credit is availed be stored outside the factory?

    Yes. With the permission of the Deputy Commissioner of Central Excise or the Assistant Commissioner

    6/8

    Cenvat Credit

    I have availed credit of first installment of 50% on capital goods. But I want to clear the capital go

    Yes. As special case, in such instances, the full 100% credit can be taken on the capital goods in the firs

    What precautions a manufacturer taking CENVAT credit is required to take?

    A manufacturer is required to take all reasonable steps like he being satisfied himself about the identity a

    (a) from his personal knowledge; or

    (b) on the strength of a certificate given by a person with whose handwriting or signature he is familiar; o

    (c) on the strength of a certificate issued to the manufacturer or the supplier , as the case may be, by the

    What are the returns prescribed to be filed with the department?

    Manufacturer -

    7/8

    Cenvat Credit

    Monthly return by 10th of the subsequent month ( Quarterly for SSI units)

    Registered dealer

    Quarterly return within 15 days of the closure of the quarter

    Service provider

    Half yearly return not later than the last day of the month following the half year Input service distributor -

    8/8

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