NN 20/2016_Exempted goods Solar pump_Cenvat Credit

[Varun Arora]

Dear Experts,

We manufactures a component of submersible pump(Machine) and In notification 12/2012 One product is covered i.e. Solar Submersible pump i.e. our customer can procures Raw Material without paying duty, in List 8 And our customer is following NN 20/2016 and directs us not to add duty.

Now my question is our yield is 60% and scrap is 40% for generating 100 60 kg final product we have to procure Raw Material i.e. Electrical sheet 100 kg Now If we supplies 60 kg to our customer then first of all whether cenvat credit need to be reversed or not and secondly whether we need to reverse Cenvat credit proportionately on 60 kg of raw material or 100 kg of raw material because scrap value is not so high.

Please suggest , waiting for your valuable suggestions.

AI Summary

Cenvat credit reversal not required when supplies are for exempted solar pump manufacture and scrap is dutiable.
Cenvat credit reversal is unnecessary where scrap is removed on payment of duty and inputs are used to produce goods covered by the solar exemption; applicability depends on verifying the buyer's entitlement to the exemption and confirming that scrap is dutiable, since those factual conditions determine whether proportionate reversal is required.