Cenvat credit on goods received free of cost

[shaji thomas]

Whether Cenvat credit can be allowed on the imported goods supplied free of cost against the low grade material supplied initially. Both the consignments are accounted for in the excise records however in the accounts/purchase ledger the free goods has not been accounted for as purchase and the value of this goods not considered for valuation in balance sheet's closing stock. Whether the CVD and SAD paid on the free goods can be allowed as Cenvat credit?

[Guest]

The relevant Factor for taking cevat credit is manufature not the factors like replacement etc

so assesee can take only if its uased in relation to manufacture

[Surender Gupta]

I am in full agreement with the view of Mr. Sri Srivathsan that as long as imported goods have been used in relation to manufacture of excisable goods, you can avail cenvat credit of CVD paid on such goods even though such goods have been received free of cost.

AI Summary

Cenvat credit entitlement when free-of-cost inputs are used in manufacture: duties paid may be credited if applied to production. Cenvat credit on duties paid for imported goods supplied free of cost is available where those goods and the duties thereon are used in relation to the manufacture of excisable goods; acquisition as free supply or omission from purchase ledgers does not itself bar credit, and duties such as CVD and SAD may be credited if the inputs are applied to manufacture.