EXCISE DUTY TRADERS ISSUE

[Guest]

Hello

Please solve the query related to CENVAT

Like we are trading & processing company (Consider B) of good, we buy goods from Manufacturer (Consider A) bring to our Godown/premises and sell to Buyers (Consider C).

Now Manufacturer Bills us with 2% of Excise duty on good.

Like ₹ 100 + 2(2% of Excise duty) = 102

Now Question is can B pass excise duty credit to C?

If yes how to bill for C? If B wants to sell at Rs- 110 (excluding tax)

Does B needs to register for Cenvat, if yes then how?

Thanks In advance , please reply with if you have full knowledge.

[Mahir S]

Yes sir, B needs to get register as Dealer under central excise to pass Cenvat credit.

The dealer invoice consists of separate columns showing cenvat availed from A and also for passing of cenvat credit to C, irrespective of charging higher price from C.

You need to approach the Jurisdictional Division/Range office for necessary guidance and clarification.

[Ramanujam Varadarajan]

Two options are available:

1. 'B' can obtain Central Excise Dealer registration and pass on the Cenvat credit charged by Manufacturer thru his own Cenvat Invoice.

2. If Manufacturer direclty despatches the goods 'C' and Bill to: 'B' and Ship to 'C', still 'C' can avail Cenvat credit based on Invoice raised by Manufacturer, though 'B' can raise separate commercial Invoice for the sale effected by them to 'C' - Refer Circular of CBEC given below in this regard.

Circular of CBEC dated 05.05.2015 – Clarification regarding Cenvat credit in transit sale through Dealer

(iii) Where a un-registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. As the dealer is not registered, there is no question of issuing any Cenvatable invoice by him . Such dealers as in the past can continue to be un-registered.

[Rajagopalan Ranganathan]

Sir,

B can pass on the credit provided B is registered as First Stage Dealer with Central Excise Department. B can sell the good at ₹ 110/- but he can pass on as credit only ₹ 2, being the duty paid by the manufacturer. B cannot pass of duty @2% of 110.

AI Summary

Cenvat credit transfer: dealer registration permits passing credit, or consignee may claim credit on manufacturer's invoice. If the intermediary obtains Central Excise dealer registration it may issue a Cenvatable invoice to pass the Cenvat credit availed from the manufacturer to the buyer; the credit is limited to the duty actually paid by the manufacturer. Alternatively, where the manufacturer dispatches goods direct to the consignee with bill to the dealer, the consignee may claim credit on the manufacturer's invoice without the dealer being registered.