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

[Santosh Mali]

Cenvat credit is available on FOC material received as Cenvat credit is on receipt of Inputs and not on payment to supplier. 

Reg. GRN/Purchase order:- Any means which proves that material is received and used in the factory of manufacture is sufficient.

Regarding Material not sent back to supplier:- Attributable Cenvat Credit needs to be reversed in case no manufacturing activity is carried out on such material.

AI Summary

Cenvat credit available on inputs received free of cost if received and used; reverse credit if not used in manufacturing. Cenvat credit is available on inputs or capital goods received free of cost or as free replacement because credit attaches to receipt and use in the factory rather than payment; any evidence proving receipt and use is sufficient, and attributable credit must be reversed if the material is not used in manufacturing.