field debit

[Ramakrishnan Seshadri]

Dear Sir,

We are manufacturer of automobile parts.We import components from our supplier. for manufacturing the parts.Sometimes the components may get fault and our customer will debit us for the same. In turn we have decided to raise invoice as field claim warranty for this defect to our overseas supplier. Now our question whether we have reverse the cenvat credit for the value of the invoice raised or what is the procedure.

Kindly guide us in this issue.

Thanks & Regards,

S.Ramakrishnan

AI Summary

Cenvat credit reversal required when duty-paid inputs are scrapped or reimbursed by supplier, even if drawback is possible.
Manufacturer must reverse CENVAT credit where imported duty-paid components become scrap and were not used in manufacture; if re-exported drawback may be claimed but credit reversal is required; reimbursement from overseas supplier including duty element also necessitates reversal of CENVAT credit because the government duty cannot be retained when the input was not used.