TaxTMI 
TaxTMI 
Is it possible to adopt 'removal as such' when the transaction value is more compared to the purchase price for the inputs? What are the precautions to be taken and how the invoicing is to be done?
removal as such-invoicing
25 Jun 2015 
3 Replies 
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Cenvat credit reversal when inputs are removed as such - excise liability equals credit reversed; pricing affects VAT and income tax.
Where inputs are removed as such or after partial processing, the registrant must pay an amount equal to the Cenvat credit taken on those inputs by issuing an invoice under rule 11; the excise component is effectively the credit reversed. Charging a higher selling price creates VAT and income tax consequences but does not change the excise reversal requirement. Repeated removals as such may invite departmental scrutiny as trading activity and challenge the eligibility to avail Cenvat credit. (AI Summary)
Where inputs are removed as such or after partial processing, the registrant must pay an amount equal to the Cenvat credit taken on those inputs by issuing an invoice under rule 11; the excise component is effectively the credit reversed. Charging a higher selling price creates VAT and income tax consequences but does not change the excise reversal requirement. Repeated removals as such may invite departmental scrutiny as trading activity and challenge the eligibility to avail Cenvat credit. (AI Summary)