reversal of cenvat credit

[VENKAT S]

A manufacturer imported an item which he uses in manufacture as raw material. If he issues that material to customer as replacement(under warranty), should the manufacturer reverse the cenvat credit availed?

AI Summary

Manufacturer Must Reverse CENVAT Credit on Imported Materials Used for Warranty Replacements, Not Manufacturing A manufacturer inquired whether they need to reverse the CENVAT credit availed on imported raw materials used as replacements under warranty instead of in manufacturing. Two respondents, Ganeshan Kalyani and Kasturi Sethi, agreed that since the materials were not used in manufacturing dutiable goods but removed as replacements, the input tax credit condition is not met. Therefore, the manufacturer must reverse the credit. Kasturi Sethi added that the credit could be reclaimed after the replaced goods are received. The original inquirer expressed gratitude for the responses.