availment of cenvat credit

[Asked by 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 and SUN]

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

Cenvat credit eligibility: buyer can claim credit for excise duty shown and paid on supplier invoice despite post-duty trade discount.
Cenvat credit may be claimed for the excise duty shown in and paid as per the supplier's invoice even if the supplier deducted a trade discount after charging duty; trade discount is an allowable deduction for assessable value and should ideally be applied prior to duty calculation, but the buyer's entitlement to credit is conditioned on payment of the invoice amount inclusive of the excise duty charged.