BYE PRODUCT PROPORTIONATE CREDIT

[george thomas]

Dear All

Our Company engaged in the manufacture of BIODIESEL production Biodiesel is exempted form Excise Duty and in the manufacture of Biodiesel one input used is Sodium Methoxide.In the manufacure of Biodiesel Bye Product is Crude Glycerin which we are using either as input for the manufacture of Refined Glycerin which is dutiable or selling to other industries.. Kindly clarify whether we can avial cenvat credit for the duty paid ion Sodium Methoxide proportionately

[KASTURI SETHI]

Final product - Definition of - Rule 2 of Cenvat Credit Rules, 2002 does not make distinction between final product and by-product. [

KALEESUWARI REFINERY PVT. LTD. Versus CESTAT, CHENNAI 2016 (340) E.L.T. 632 (Mad.) = 2015 (10) TMI 2568 - MADRAS HIGH COURT

You can take credit on bye-product in the situation explained. Duty should be paid on byproduct and the same should be used in or in relation to the manufacture of dutiable final product. Regarding proportionate credit, you will have to resort to CMA's certificate. (Cost Accountant) for exact admissible credit.

[YAGAY and SUN]

In our opinion you cannot avail the proportionate CENVAT credit. Legal position has been changed in 2015.

AI Summary

Cenvat credit entitlement may hinge on whether duty on a by product is paid and used in dutiable manufacture.
Rule 2 of the Cenvat Credit Rules, 2002 does not distinguish between final products and by products; credit may be claimed where duty is paid on the by product and it is used in or in relation to manufacture of a dutiable product. Proportionate credit should be quantified by a Cost Accountant's certificate. A contrary view noted in the discussion asserts that proportionate Cenvat credit is not available due to a legal change reported in 2015, creating conflicting interpretations.