Cenvat credit on bicycle

[manish kumar]

Dear sir,

Thanks for reply of my previous curies.

Now I am present here with a new query. If a dealer has purchased bicycle under exemption from an area based central excise exemption in excise regime. Then in GST regime he has taken credit on above said goods with some provision . Now he supplied bicycle after utilising such CENVAT credit. Can we allow such CENVAT credit availment & utilisation ..Please also explain on which ground he has taken Cenvat credit on bicycle ?

[KASTURI SETHI]

In pre-GST era, Central Excise duty was levied on "manufacture" and now GST is levied on supply whether supplied by manufacturer or dealer. Though bicycles were under area based exemption. In GST regime, bicycle and bicycle parts attract GST @ 12% under HSN 8712 and 8714 respectively. Now there is no one to one correlation. ITC is to be used for taxable supply of goods or services in the course of business or furtherance of business.

So answer to your query is 'yes'. Other experts may also intervene on this issue.

[manish kumar]

Sir, but The said dealer has purchased bicycle from excise expemtion area where no any excise duty has been paid . Then how can he take credit. Has there any provision ?

[DR.MARIAPPAN GOVINDARAJAN]

Under which provision he has taken credit for the bicycle that is purchased from exempted regime?

[MUKUND THAKKAR]

please refer sec 139-142 you will get it idea for availment of cenvat credit and Utilization of credit.

[Ganeshan Kalyani]

If tax component was there in the Item while purchase then only credit is allowed. Otherwise also which credit the querist is asking need clarification.

[KASTURI SETHI]

Sh.Mukund Thakkar Ji,

With reference to your reply dated 30.8.18, you have reached at proper place.

[KASTURI SETHI]

Sh.Manish Kumar Ji,

Pl.refer to your cross query dated 29.8.18.

Bicycle purchased under area based exemption scheme before 1.7.17 . That said stock of bicycle stock ceased to be exempted from 1.7.17. In your query you have mentioned, "the dealer has taken credit on above said goods"

What do you mean by the phrase, " about the above said goods " ? Pl. specify. Such specified query has also been raised by Sh.Ganeshan Kalyani Ji.

AI Summary

Cenvat credit on previously exempted goods depends on presence of tax component and entitlement for taxable supplies. Whether Cenvat credit may be availed and utilised for bicycles purchased under a pre GST area based excise exemption turns on whether tax was actually paid on those purchases; absent a tax component at procurement, Cenvat credit cannot properly be claimed, and the later imposition of GST does not retroactively create entitlement-any credit claim must meet statutory and transitional conditions and be supported by evidence of tax paid.