CENVAT credit in goods

[Guest]

Sir,

I'm working in the procurement section of a Power Transfomer manufacturing firm situatd in Kerala. We source most of the raw materials from north indian suppliers/manufactirers. Most of our customers are also in Northern side of India. Transformer oil is one of the rawmaterial and which we just fill in the tank of the transfoemr before dispatch. This can be done from the site/customer's end also. If we could dispatch the same from our supplier to customer's site huge amount of freight can be saved. Is there any provision to avail CENVAT credit for direct dispatch of oil from our supplier to customer as we are un necessarily wasting our money (freight) and time ( travel time).

[YAGAY andSUN]

Dear Harikrishnan,

There is a provision to send the goods directly to job-worker from the supplier but there is no such provision to meet your requirement, to send goods directly from supplier to your ultimate buyer. However, you may seek specific permission from the Commissioner of Central Excise in this regard after enumerating all the material facts in your application for seeking the permission. Modus oprendi will be Bill to Ship to Transaction, in this matter. PO will be issued accordingly to cover these types of transactions. If required also seek permission from your VAT Commissioner also. For VAT/CST purpose these transactions would come under Section 3 (a) of the CST Act, 1956 read with Rules made there-under and specifically allowed.

Also have discussion and or do cross check with you Indirect Tax Consultant.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

 

AI Summary

CENVAT credit eligibility: direct supplier-to-customer dispatch may require Commissioner permission and VAT/CST clearance. There is no general provision allowing supplier-to-ultimate-customer direct dispatch for CENVAT credit like the supplier-to-job-worker route; manufacturers may seek specific Commissioner of Central Excise permission, adopt a Bill-to-Ship-to transaction and appropriate POs, and obtain VAT/CST clearance, with professional indirect tax advice.