Cenvat Credit on Common Inputs

You might use common inputs in the manufacture of excisable goods as well as in the manufacture of nonexcisable goods. In some cases, you might not be able to track the issue of the common inputs based on its end use. In such circumstances, you can claim Cenvat credit on the entire consignment and can issue such inputs for the manufacture of nonexcisable goods. To claim Cenvat credit on the entire consignment, you must calculate the excise duty liability at 10 percent of the value of the goods, excluding sales tax.

To claim Cenvat credit:

1. Verify that the credit claimed during the procurement process are not off set.

2. Define a price adjustment so that the system calculates 10 percent on the value of the item excluding sales tax.

   The system uses the price adjustment when you sell or transfer the goods.