Shortage material received

[SNEHAL SHAH]

Sir,

 

We are purchasing chemical on daily basis from x company but Approx 7 to 8 times we had received material shortage ( above 15 % ) amount also huge ( taxable amount -- Rs.25000 ) .We have also take cenvat credit less & In stores MRN also book less but party take objection that why i am bare cenvat loss ?

 

Please suggest above issue ? In excise point of view what type of help giving to pary ?

 

Sachin

 

[Surender Gupta]

Cenvat Credit is available on the basis of material received in the factory. If you receive short material than mentioned in Invoice, you have no option but to avail cenvat credit proportionate to the material received in the factory.

However, if the loss is caused during the manufacturing process, there is no need of reversal or less availment of credit. But, your case is not falling in this category.

AI Summary

Cenvat credit entitlement follows actual material receipt; credit must be proportionate where invoice exceeds received quantity. Cenvat credit is claimable only for inputs actually received in the factory; when invoice quantities exceed physical receipt, credit must be availed proportionately to the material recorded as received. The manufacturing-loss exception permitting full credit without reversal applies only where loss occurs during manufacture and is not applicable to shortages arising before or on receipt from the supplier.