Cenvat Credit

[Rizwan Ullah]

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 ?

AI Summary

Cenvat credit on exempted inputs is not available where the input duty falls under an exemption notification.
Credit of cenvat duty on an input that is classified as an exempted good under the exemption notification is not available; exempted goods are those exempt from the whole of excise duty and include goods made effectively exempt under exemption notifications, so duty paid under such notifications cannot be taken as cenvat credit. Practical issues and some decisions on mistaken payment are noted, but availability is governed by the exempted goods definition and the Cenvat rules, with the duty normally treated as a product cost.