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jitendra gaur (director)     09 September 2010

cenvat credit

i m manufacturaing cutting tools from carbide and hss.buying carbide rods under tarrif 82 and selling after manufacturing under terriff 82.

is it correct to take full cenvat credit  on buying carbide rods which are my raw material and under teriff  head 82 .


also i want to know whether  for sme industry can we take full cenvat credit in first year on capital goods like machines.


jitendra gaur


 2 Replies

Adv. Santosh Mahanor (Lawyer)     17 September 2010

if your turnover is below that 4 cr in previous financial year then you can  take full credit

on Capital Goods.


Deviprasad (Advocate)     16 December 2010

Hi Mr. Jitendra,

First you have to see that, the  activity what  your doing is whether amounts to manufacture or not. Only doing the activity of cutting and slitting doesnot amounts to manufacture. Hon’ble Supreme Court, High Courts and the CESTAT wherein the processes of slitting and cutting of different materials have been held to be
not amounting to manufacture of any new commodity

“manufacture” includes any process, -
(i) incidental or ancillary to the completion of a manufactured product;
(ii)which is specified in relation to any goods in the Section or Chapter notes of the
First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to
manufacture; or
(iii)which, in relation to the goods specified in the Third Schedule, involves packing
or repacking of such goods in a unit container or labelling or re-labelling of
containers including the declaration or alteration of retail sale price on it or
adoption of any other treatment on the goods to render the product marketable to
the consumer,
and the word “manufacturer” shall be construed accordingly and shall
include not only a person who employs hired labour in the production or
manufacture of excisable goods, but also any person who engages in their
production or manufacture on his own account. 

Conclusion; In my opinion if your activity amounts to manufacture, then you can take the full Cenvat Credit on your rawmaterials. Regarding quarry on Cenvat Credit on Capital Goods, You can take 50% Cenvat Credit on First Year and remaing 50% in the Next year.



Prasad G.K

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