whether cenvat credit eligible on free samples-reg

[Ramakrishnan Seshadri]

Dear Sir,

We are manufacturer of automobile parts. We are receiving samples from our suppliers for manufacture of new parts on payment of excise duty by the supplier.

Our question is whether the duty paid by the supplier is eligible for cenvat credit or not. If not what is the notification.

Now our supplier is claiming the excise duty paid by them on the samples supplied. We have not taken credit for that.

Kindly clarifiy.

Thanks and Regards.

S.Ramakrishnan.

[Mahir S]

Sir,

The samples are used for manufacture of new parts. Thus, samples are used in relation to the manufacturing activity for the purpose of manufacture of finished goods. Without samples, the finished goods cannot be manufactured, hence such samples are part and parcel of the manufacturing activity.

Hence, I personally believe that you may avail cenvat credit on such samples.

[VVFINDIA Taloja]

Dear Ram,There is no any law clause that says payment has to be done for getting eligibility of CENVAT Credit. Only you need to assure is that, it should be used in or in relation to mnfr of your finished goods. I advise you to take cenvat credit. its my opinion!!!

[MUKUND THAKKAR]

Sir,

According to me need not take the credit of on sample, because you just keeping sample in your Qc dept for long time and end of the day at any time. you will remove as such or scrap. if your amount is accumulate defiantly during the time of audit it is come to notice and raised un necessary points and end result is litigation. my personal view if amount is negligible please do not invite unwanted paper work.

[Ramakrishnan Seshadri]

Dear Sir,

Thank you all for your reply. These samples will be immediately used for manufacture of final products and used for testing purpose. It will not be kept so long.

Thanks and Regards,

S.Ramakrishnan.

[YAGAY andSUN]

Dear Ramakrishnan,

It is settled legal position that CENVAT credit on duty paid sample would be available to manufacturer of finished goods. You can avail the CENVAT credit on such samples.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

CENVAT credit eligibility on duty-paid samples depends on their use in or in relation to manufacture, with documentation advised. Duty paid on samples used in or in relation to the manufacture of finished goods qualifies for CENVAT credit; entitlement depends on actual use in manufacturing activity rather than payment status. Practical caution: prolonged retention, scrapping, or accumulation of sample value may invite audit scrutiny, so ensure immediate use and supporting documentation.