CIR NO.877/15/2008-CX, DT. 17/11/2008
- Document type
- Circular
- Reference no.
- O
- Dated
Clarification regarding reversal of Cenvat Credit in case of trade discount
Clarification regarding reversal of Cenvat Credit in case of trade discount
2. The issue has been examined. Since, the discount in such cases are given in respect of the value of inputs and not in respect of the duty paid by the supplier, the effect of reduction of value of inputs may be that the duty required to be paid on the inputs was less than what has been actually paid by the inputs manufacturer. However, the fact remains that the inputs manufacturer had paid the higher duty. Rule 3 of Cenvat Credit Rules, 2004 allows credit of duty paid by the inputs manufacturer and not duty payable by the said manufacturer. There are many judgements of Honble Tribunal in this regard which have confirmed this view.
3. In view of above, it is clarified that in such cases, the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise. However, if the duty paid is also reduced, along with the reduction in price, the reduced excise duty would only be available as credit. It may however be confirmed that the supplier, who has paid duty, has not filed/claimed the refund on account of reduction in price.
4. Trade and field formations may be suitably informed.
5. Hindi version will follow.
6. Receipt of this Circular may kindly be acknowledged
Yours faithfully,
(Rahul Nangare)
Under Secretary to the Government of India.