Question

If final good attracts an excise duty of Rs. 8000 and Rs. 1000 has already been paid on inputs then the firm will pay the Rs. 7,000 towards excise duty. It is paying tax according to________.

• A. VAT
• B. CENVAT
• C. MODVAT
• D. None of the above

Answer 1

The correct option is B CENVAT

Under CENVAT scheme the credit of the excise duty/additional duty of customs paid on inputs and capital goods and service tax paid on input services allowed to be utilized for the payment of the excise duty on the final products or service tax on output services in order to avoid cascading effect of the duty/tax.