Economics · Economy
In the context of the CENVAT credit system, what specific mechanism is employed to ensure that excise duty is levied only on the 'Value Added' at each stage of production?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Exempting the manufacturer from tax liability on the finished goods if the raw materials were sourced from a registered dealer.
- 2Aggregating the taxes paid on all manufacturing processes and adding them to the final Transaction Value at the point of removal.
- 3Applying a fixed percentage of tax to the total cost of inputs and capital goods regardless of the final product's value.
- 4Calculating the total excise duty on the finished product and subtracting the tax already paid on the raw materials used.✓
Correct answer
Calculating the total excise duty on the finished product and subtracting the tax already paid on the raw materials used.
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