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 for R&D: permissible when R&D is integral to manufacturing; reversal only if resulting goods are exempted.
Inputs issued to in-house R&D and trial production are eligible for cenvat credit because R&D/trial runs are integral to manufacturing and costs are recovered in the transaction value; reversal is required only if inputs produce exempted goods that are cleared as exempted removals, whereas goods retained in factory from trial runs need not trigger reversal.