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?

AI Summary

Cenvat Credit Eligibility Confirmed for Free Replacement Goods Used in Manufacturing Under Excise Rules A query was raised regarding the eligibility of Cenvat credit on imported goods received free of cost as replacements for initially supplied low-grade materials. Although these goods are recorded in excise records, they are not accounted for in the purchase ledger or balance sheet. Two responses agreed that Cenvat credit can be availed if the goods are used in the manufacture of excisable goods, regardless of their free cost. The focus is on the use in manufacturing rather than the cost or replacement nature of the goods.