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CENVAT Reversal against sample testing, Central Excise

Issue Id: - 116890
Dated: 4-12-2020
By:- Rajesh Purohit
CENVAT Reversal against sample testing

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Kind attn. Kasturi Sethi Sir

A pharmaceuticals manufacturer have to test their each and every batch in house (not sent out side) before final packing.

Although Chapter11 provide 'NO DUTY ON SAMPLE'' until cleared/removal from the factory. But can department demand reversal of CENVAT against sample used for testing ? whereas this testing is part of manufacturing process.

Please cleaify all the experts

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1 Dated: 4-12-2020
By:- KASTURI SETHI

Sh.Rajesh Purohit Ji,

If final product is dutiable, then no reversal of Cenvat Credit is required on the value of sample used captively in the manufacture of FINAL product. In the scenario explained by you, it is a case of captive consumption. See Notification No.67/95-CE dated 16.3.1995 as amended vide Notification No.19/14-CE dated 11.7.2014 read with Board's Circular No.96/85/2015-CX dated 7.12.15 (Para No.B-18 refers.)

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