What is Removal of Inputs As Such
It means sale/return/use of inputs as it is without being usedIf inputs are removed as such,
- the manufacturer of the final products or provider of output service has to pay(reverse) an amount equal to the credit availed in respect of such inputs or capital goods.
- Such removal shall be made under the cover of an Invoice referred to in Rule 9.
- The buyer will be able to take credit of such amount
Exceptions
The amount need not be paid if
- Inputs are removed for providing free warranty on final products
- Service Provider can remove inputs/capital goods outside the factory for providing free warranty.
Example
20000 kg Goods Purchased from Q ltd
| QLTD | |
| Item A | 100000 |
| (20000 Kg*5) | |
| Add | |
| Excise 12.5% | 12500 |
| Total | 112500 |
Suppose 600 KG Returned to Q ltd
What is treatment of Cenvat on return of goods
View Answer| Q LTD | |
| Item A | 3000 |
| (600 Kg*5) | |
| Add | |
| Excise 12.5% | 375 |
| Total | 3375 |
In this case,
on purchase,we had taken cenvat of 12500
On purchase return,we will have to pay (reverse) cenvat of Rs 375
Invoice needs to be issued to Q Ltd
mentioning excise duty and Q ltd can claim cenvat of the same.
This purchase return is an example of removal of inputs as such
Example
20000 kg Goods Purchased from Q ltd
| QLTD | |
| Item A | 100000 |
| (20000 Kg*5) | |
| Add | |
| Excise 12.5% | 12500 |
| Total | 112500 |
Suppose 600 KG not used in production but sold to S ltd
View AnswerIn this case also
on purchase,we had taken cenvat of 12500
On resale of such inputs ,we will have to pay (reverse) cenvat of Rs 375
Invoice needs to be issued to S Ltd mentioning excise duty and S ltd can claim cenvat of the same
| S LTD | |
| Item A | 3000 |
| (600 Kg*5) | |
| Add | |
| Excise 12.5% | 375 |
| Total | 3375 |
This sale of inputs is also an example of removal of inputs as such
