ED Exemption certificate
This query is : Resolved
27 March 2010
We have received an EDEC certificate from our customer. We were told that we should not charge ED to our customer and also reverse the credit for the total amount billed even though our input component costs are much much lower.
If so, this is a double edged sword and is a big loss for the orgn to take EDEC.
Is this true? How should we treat this.
If so, this is a double edged sword and is a big loss for the orgn to take EDEC.
Is this true? How should we treat this.
30 March 2010
You can reverse the credit on actual basis, if you maintain separate account of inputs. If such separate account is not maintained, approximate reversal is allowed under Rule 6 of Cenvat Credit Rules.
In cases where only 1-2 consignments are sold on exemption, separate account create more problems, hence people prefer to reverse the approximate amount@ 5%.
In cases where only 1-2 consignments are sold on exemption, separate account create more problems, hence people prefer to reverse the approximate amount@ 5%.
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