Suppose an Assessee is involved in manufacturing of an Excisable product 'A' and clearing the same after payment of Excise duty as applicable say 12.5%.
While making that finish product 'A' , Assessee is using certain inputs , out of all those inputs used in manufacture of Excisable product 'A' one input falls under an exempted category.
Assesse is paying duty on that exempted category input as applicable say 1% .
Is Assessee entitled to take cenvat credit of 1% duty paid on that exempted good which is being used as input in manufacture of dutiable finished product ?
Cenvat Credit Unavailable for 1% Duty on Exempt Inputs, Clarified Under Cenvat Credit Rules, 2004 An anonymous individual inquired about the eligibility for Cenvat credit on a 1% duty paid for an exempted input used in manufacturing a dutiable product. A respondent clarified that under Cenvat Credit Rules, 2004, goods paying 1% duty under Notification No. 1/2011-CE are considered exempt, thus credit is unavailable. Another respondent supported this view, while others sought clarification on the duty payment and questioned the rationale behind purchasing exempt goods with duty. They concluded that credit is generally not available if duty is paid incorrectly or if the final product is exempt from excise duty. (AI Summary)
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