availment of cenvat credit

[Guest]

Dear Sir, if one of our supplier had supplied the goods to us which is input to us but in the invoice he has deducted trade discount after charging excise duty on the invoice and we had availed such credit of excise duty paid, so whether it would create problem to us pls explain, thanks and regards

[Rajagopalan Ranganathan]

Sir,

Trade discount is allowable deduction while arriving at transaction value under Section 4 of Central Excise Act, 1944. In your case the trade discount was deducted by your supplier after charging excise duty. If the excise duty is calculated after deducting trade discount it will be less than the excise duty paid before deduction. If you have paid the amount indicated in the invoice to your seller, then you are eligible to avail the credit of central excise duty charged by seller. Hence you will not have any problem since what ever amount of excise duty shown in the invoice is paid by you and you can avail the same as credit.

[YAGAY andSUN]

Trade Discount should be deducted from the assessable value prior to calculation of C.E. Duty since it is allowable deduction in C.E. Laws and VAT/CST Laws. In your matter, the supplier has deducted trade discount after charging the C.E.Duty on the assessable value mentioned in the Invoice. There would not be any issue if you avail CENVAT credit on this amount as you are availing benefit on the amount which is being paid to the supplier.

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

AI Summary

Query on CENVAT Credit: Trade Discounts Allowable Under Central Excise Act, 1944; Credit Availment Clarified A forum participant raised a query about availing CENVAT credit when a supplier deducted a trade discount after charging excise duty on an invoice. Two responses clarified that trade discounts are allowable deductions under the Central Excise Act, 1944. Both experts agreed that if the excise duty is calculated after deducting the trade discount, the buyer can still avail CENVAT credit, as long as the excise duty shown in the invoice is paid. Therefore, availing credit in this scenario should not pose any issues.