child part of parent product(Part of Product)

[RAM SHARMA]

Dear Experts,

We are registered manufacturer in central excise for excisable finished product. Our finished product is liable for excise duty and part of our product is nil rate of duty. Can we sale part of our product without registration in central excise. what precaution should be taken for removal of part at nil rate of duty. Please advice.

Thanks

[Surender Gupta]

In case you are the manufacturer of child parts and same is  exempted from central excise duty, you may remove the same without getting the your unit registered with central excise.

But, if you are manufacturing finished products using such child parts, which is is liable to duty of excise, you may be availing Cenvat Credit on the raw material used therein.

Therefore, before removal of child parts without excise duty, if you have availed the cenvat credit on the raw materials, you need to reverse the credit as per Rule 6 of Cenvat Credit Rules, 2004.

AI Summary

Removal of exempt components permitted without excise registration but requires reversal of Cenvat credit under Rule 6 if claimed. Manufacturers may remove an exempt child part without separate excise registration, but if Cenvat credit was availed on inputs used to produce that part, the credit must be reversed pursuant to the Cenvat Credit Rules before removal to ensure compliance when dispatching the part at nil rate.