Movement of Input under cenvat Rule 4(5) (a)

[SURYAKANT MITHBAVKAR]

We procured machine from our vendor but that vendor is not registered under Excise Act so Motors and Gear Box require for that manufacturing machine we are buying in our name and availed cenvat credit and therafter we send that Motor and Gear Box under Challon 4(5) (a) to that vendor for assembled that machine. In Challon we are stating purpose is Trial Purpose. Pl. advice this process is correct or not

[Snehal Kulkarni]

Please refer the relevant rule 4(5)(a) of Cenvat Credit Rules 2004

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(5) (a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, ………………….

By this provision of rule, you can remove the inputs for processing, testing, repair, re-conditioning or for the manufacture of the intermediate goods. No where there is specify that the inputs are allowed to remove for Trial Purpose.

In your case, you are advised to remove the goods on Excise Invoice with payment of duty to your Non Excisable vendor and after the testing you may ask him to remove these goods on his challan with the same excise Invoice.

After receipt of the goods you may take the Cenvat Credit on your own Invoice.

AI Summary

Cenvat credit eligibility: sending inputs to a job worker must be for authorised processing or testing, not mere trial purpose. Rule 4(5)(a) permits sending inputs or capital goods to a job worker for processing, testing, repair, re conditioning or manufacture of intermediate goods and still claim Cenvat credit, but does not authorize removal for a 'trial purpose.' If the recipient is not excise registered, the compliant practice is to remove the goods on an excise invoice with duty payment, allow return on challan referencing that invoice after testing or processing, and then take Cenvat credit on the assessee's invoice upon receipt.