What is Cenvat?
Cenvat, or the Central Value Added Tax, is a component of the tax structure employed by many countries in the western section of Europe. The inspiration for Cenvat is derived from a tax system that is generally referred to as VAT, or a Value Added Tax. Both Cenvat and VAT are designed with the express purpose of minimizing a cascading effect when it comes to taxes on income, goods and services, and other forms of tax revenue. The aim of Cenvat is to aid in maintaining a tax structure that is considered equitable for both the citizens incurring the tax and the government that is collecting the tax revenue. One notable example of Cenvat can be found in India. Originally designated as a modified value added tax, this approach placed some limits on the type of taxation that could occur on goods used in the manufacturing process of finished consumer products. Modvat was later designated as Cenvat, and continued to function as a means of promoting industry within the country while still rece
The Modvat Scheme has been replaced by a new set of rules called CENVAT Credit Rules 2002. The definition of Capital Goods, Exempted Goods, Final products and the inputs has been provided in Rule 2 of CENVAT Credit Rules, 2002. It also included the list of items eligible for Capital Goods as well as for the inputs. A manufacturer or producer of final product is allowed to take CENVAT credit of duties specified in the Cenvat Credit Rules , 2002. For more info visit : http://excisekanpur.nic.in/cenvat.
