Cenvat credit on Material received free of cost/Free replacement

[SNEHAL SHAH]

R/sir,

We are received input/Capital material Free of cost & duty involved in this consignment is Rs.40000=00 Approx . We have also received so many consignment ( Imported ) with payment of CVD and additional duty ( Total duty involved 75000=00 ) as a free replacement ( that means we are not sending regected material at outside india but party send material free replacement ) .

Now my question is that :

Is it we can availed cenvat credit on this material which was received under free replacement and free of cost basis ? for take a cenvat credit is it mandatory prepare GRN/Purchase order ?

Please guide to us sir ,

Thanks and regards,

SNEHAL SHAH

AI Summary

Eligibility for Cenvat Credit on Free Materials Clarified: Credit Allowed if Used in Manufacturing, Else Reversal Needed. A query was raised regarding the eligibility to claim Cenvat credit on materials received free of cost or as free replacements, without sending back rejected materials. The duty involved in these consignments was approximately Rs. 40,000 and Rs. 75,000. The response clarified that Cenvat credit is available for materials received, not based on payment to the supplier. It is sufficient to have proof that the materials are received and used in manufacturing. However, if no manufacturing activity occurs, the attributable Cenvat credit must be reversed.