Bill to Shift to in Import

[RAJENDRA KHOMNE]

Sir,

Good morning

We want to procure a machinery through import on bill to ship to basis, purchase order will be issued accordingly, The seller would issue bill in our company name and the machinery would be shipped to other company. I want to know that in such type of transaction can company to whom machinery would be shipped take excise credit on the base of custom bill of entry. Pl explain with cenvat credit rule.

Thanks

Khomne R. M.

[KASTURI SETHI]

Sh.Rajendra Khomne Ji,

Cenvat Credit is allowed to the other company who is de fecto a manufacturer and would use the imported machine for manufacture of excisable goods (dutiable). It is covered under Rule 9(1) of Cenvat Credit Rules, 2004, "The credit shall be taken by the manufacturer ...................... Undoubtedly the other company is a manufacturer for manufacture of excisable goods. However, you will have to take shelter of case laws. There is a number of judgements on this issue. You are well aware. For cenvat Credit there are two basic requirements:-

.CE duty must be paid.

Inputs/capital goods must be used in or in relation to the manufacture of dutiable final product.

In your case both the parameters stand conformed.

In order to avoid double availment of credit and audit objections, you must endorse Bill of entry ( which is in your name) to the other company who would use machine.

Thus your company would not be prone to litigation. This is my view.

[RAJENDRA KHOMNE]

Thanks Sir

[Ganeshan Kalyani]

Sir, the document should also be in the name of manufacturer availing the credit. Thanks.

AI Summary

Cenvat credit entitlement: recipient manufacturer may claim credit if duty paid and imported machinery used in manufacture. Cenvat credit on imported machinery billed to one party but shipped to the actual manufacturer is allowable if central excise duty is paid and the capital goods are used in manufacture of dutiable goods; to avoid double credit and audit issues, the bill of entry should be endorsed to, and documentation should be in the name of, the manufacturer availing the credit.