Material used for R & D Purpose

[Guest]

Dear Sir,

We are a manufacturer and we have R & D in which we are doing all R & D works of our factory.

For R & D purpose we take some material like R.M & production sample pieces for R&D purpose.

My Question is how we can issue this material for R & D Purpose as we are not use these material for production purpose. We need to reverse the duty on that material how much we use for this R & D or not ?

Regards

Swapneswar

[YAGAY andSUN]

Dear Swapneswar,

It is settled legal position that 'Research and Development' is integral part of manufacturing activity. You can issue material for it and CENVAT credit/Input Tax Credit would be available to you on such activities without any hitch.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ganeshan Kalyani]

Research and Development Department are integral part of manufacturing unit if iy is within manufacturing premises. I would like to discuss that in case where the R&D is situated some other location distant from the manufacturing unit then whether Cenvat Credit on Excise duty paid be available. Discussion will enrich knowledge.

[Mahir S]

Sir,

In regard to Inputs/Capital goods used in R and D units located outside the factory of manufacturer, the benefit of CENVAT credit is not available.

[Guest]

Dear Sirs,

Thanks for your valuable reply

If we developing a new products using our Inputs and material received from vendors on FOC basis and want to send these new products to our other unit or to marketing people as a sample then in that case we need to make excise invoice for this sample material are clearing from factory ? or we can remove in without duty payment ?

Regards

Swapneswar Muduli

[Ganeshan Kalyani]

Central excise duty is liable on removal of goods from the factory gate and as such you cannot remove the goods without paying duty.

[Guest]

Dear Sir,

If we issue material from production to our in house quality lab and design for testing purpose with in our factory in that case excise duty is liable for payment on that goods ? As these goods are not remove from the factory.

2) If we destroyed these goods after testing in that case what is the liability of Excise Duty ?

Regards

swapneswar

[Mahir S]

In both above cases, no duty liability and no need to reverse duty..

AI Summary

Research and Development eligibility: in factory R&D qualifies for CENVAT credit, external R&D may not and samples removed require duty. In factory Research and Development is integral to manufacturing and permits CENVAT credit on inputs used for R&D without reversal; external R&D units located outside the factory do not qualify for credit. Removal of developed goods or samples from the factory gate triggers excise duty and requires appropriate invoicing and duty payment. Issuance to an in house laboratory and destruction of goods after testing within factory premises do not attract duty or require reversal under the described circumstances.