Input Tax Credit under KVAT: conditions, statutory restrictions, and adjustments on change of use and exports.
Input tax credit under KVAT allows registered dealers to set off input tax against output tax when supported by invoices/debit notes and claimed timely; statutory restrictions bar credit for purchases related to exempt supplies, certain scheduled goods, specified capital goods, fuel and purchases under Sec 3(2), unregistered vendors, agents (in some cases) and works contracts, while capital goods, pre registration purchases, exports, interstate sales and SEZ supplies have specified conditional treatments. (AI Summary)

Excise duty applies to by products, scrap or residues when they are marketable or capable of further processing.
By-products generated incidentally in the course of manufacture are excisable when removed from the factory; exempted by-products avoid duty and related credit rules. Scrap is excisable only if generated regularly and continuously during manufacture and is marketable; scrap from repair or maintenance is not dutiable. Residues that can be further processed into marketable products are excisable, whereas residues with negligible recoverable material or not known in market use are not. Characterisation determines duty liability, Cenvat credit eligibility and responsibility of job workers to discharge duty. (AI Summary)