Monogram on Rule 6 of CENVAT Credit Rules
MONOGRAM ON GUIDANCE NOTE CERTIFICATION BY COST ACCOUNTANT UNDER RULE 6 OF CENVAT CREDIT RULES
Mr. V.S. Datey, a well-known author of many books on various topics - particularly relating to indirect taxes and corporate laws has drafted a Monogram on Guidance Note Certification by Cost Accountant under Rule 6 OF CENVAT Credit Rules, which is hosted on Institute’s website: www.icwai.org for comments of members of Institute and readers. The comments may please be sent by e-mail at: email@example.com or by post by 10th February 2011 to:
Mr. J.K. Budhiraja
Director (Professional Development)
The Institute of Cost and Works Accountants of India
“ICWAI Bhawan” 3, Institutional Area,
Lodhi Road, New Delhi-110003
CENVAT credit Rules provide for availment of credit of excise duty paid on inputs and capital goods and service tax paid on input services utilised for payment of excise duty on final products and service tax on taxable output services.
As per basic principle of VAT, credit of duty or tax can be availed only for payment of duty on final product or output services. As a natural corollary, if no duty is payable on final product or output services, credit of duty/tax paid on inputs or input services cannot be availed.
As per Rule 6(1) of CENVAT Credit Rules, CENVAT credit is not admissible on such quantity of input or input service which is used in manufacture of exempted goods or provision of exempted services [see annexure for text of rule 6 of Cenvat Credit Rules].
Thus, if inputs and input services are partly used in exempted final product/output service, CENVAT credit of that portion of input/input service will not be available.
The monogram also explains various terms and procedure with examples and Tables for availing CENVAT Credit.