Discount purchase

[Shanmugam Sreedevi]

Purchase from party with 100 percent discount.  The party charges Excise duty of 12.36 percent of basic amount.  But the basic value & Local tax is entered as 100 percent Discount.

Shall we account this bill only excise duty amount?  Can we take cenvat input credit for the same.

Please clarify

[SHIVKUMAR SHARMA]

 Dear Shanmugam Sreedevi 

Yes ,You can  take  Cenvat credit  agst. the input received by you on the basis of  valid document.

SHIVKUMAR SHARMA 

[YAGAY andSUN]

Yes, you may avail the CENVAT  credit on this bill provided you use inputs/components/raw-material etc. in the manufacturing of finished goods.  Further, you would have to follow the prescribed the provision of CENVAT credit Rules, 2004 as amended from time to time.

Team YAGAY & SUN

(Indirect Tax Consultants)

AI Summary

Cenvat credit allowed where valid invoice supports receipt of inputs used in manufacture, subject to CENVAT Credit Rules compliance. Purchase showing 100% discount with excise duty charged: Cenvat credit may be availed if the recipient holds valid documentary evidence of receipt and uses the inputs in manufacturing, subject to compliance with the procedural and substantive conditions of the CENVAT Credit Rules, 2004.