Cenvat on input issued for R & D situated in factory

[Yatin Bhopi]

We are manufacturer. We have in house research and development centre where we are developing new products, grades as per requirement of customer.  Further some time we even take trail production before going for full batch production. To this purpose we issue some quantity of our raw material. My query is whether we need to reverse the cenvat credit to the proportionate to quantity issue to R & D. Please also give me 2 – 3 case law in support.

AI Summary

Cenvat Credit Reversal for R&D: Experts Say No Reversal Needed, Except for Trial Production Without Excise Duty Payment A manufacturer inquired about the necessity of reversing Cenvat credit for raw materials used in their R&D center. Two respondents, Rajesh Nathoo and Pradeep Khatri, advised that Cenvat credit should not be reversed, as R&D is integral to manufacturing and costs are recovered in the transaction value. Sreemannarayana B, however, noted that credit should be reversed if inputs are used for trial production without excise duty payment, unless the goods remain in the factory, as they are not considered exempt until cleared.