Dutaible Input use for cleaning

[Chetan Pawar]

Dear All,

We are the chemical manufacturing company, our raw material in chemical form & we are dispatching the material in tanker. but we have used the our raw material for tanker washing in small qty but which canvat credit has been availed, can we reversed the same, please give the your opinions with legal aspect.

Chetan Pawar

[Mukund Thakkar]

your  question is  your  inputs is not  used in mfg. so you are eligable take the credit or not?, In above issue it is appear that you can used your input  for making  your products (chemical products) perfect by quality wise. if any inputs used for making  your quality batter. it is relation of  manufacturing. such type of activity merely used in paint industries before filling  the  durms of  paints they are using  the chemical to remove the any dust partical inside the drums. same is applicable in your case to remove  the dust particals or any other unwanted particals  you are using the inputs for cleaing  purpose. so according to me you need not reverse the credit.

[YAGAY and SUN]

If washing/cleaning of tanker with chemical is prerequisite of your manufacturing process and you also documented it, then, you may avail the CENVAT credit on such chemical otherwise not.  Please make a process flow chart of your manufacturing process by clearly depicting that where this washing/clearing process fits in to substantiate your claim that you are eligible for avail the CENVAT credit on Chemical used in cleaning of tanker etc.  Get this process verified from your technical head/Management and if possible, then, from Chartered Engineer.

Further, you would also be required to follow of the provisions of CENVAT credit Rules, 2004 as amended from time to time.

Team YAGAY & SUN

AI Summary

CENVAT credit eligibility: cleaning chemicals used as manufacturing prerequisite may qualify if documented and verified.
CENVAT credit for chemicals used in tanker washing is permissible only if the cleaning is an integral, documented prerequisite to manufacturing that contributes to product quality; taxpayers must prepare a process flow chart, obtain technical verification, and comply with CENVAT credit rules to substantiate the claim, otherwise credit is not allowable and reversal may be necessary.