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Query regarding rule 3 (5a)

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Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2015 Hello Experts,
My query is regarding a Rule of cenvat credit rules viz. Rule 3 (5A).
I want to understand that what does this rule says in breif.
I am running a manufacturing business of PP Bags having Tariff Code 39202090. Currently I purchase pp woven fabrics as a raw material and convert it into PP woven bags as a finished goods. But, in this case I am purchasing PP Woven fabrics and selling that fabric to third person without doing further conversion in it. So, for billing purpose what should I do? My firm is regestired in Excise department as a manufacturing concern. Also I have opt for exemption of duty till 1.5 crores.
My tax consultant told me to mention the following line as Remarks: Inputs cleared as such u/r 3 (5A) of Cenvat Credit Rules 2004; & Clearance is without taking credit of duty.

Please Help me out. It's Very very Urgent.

Thanks in advance.

Arun Kumar Singh

Arun Kumar Singh (Expert)

21 January 2015 The assessee is not manufacturer of those inputs. Hence, he can not and need not pay excise duty on transaction value, even if the inputs are sold at higher price. under rule 3(5A) of cenvat credit rules only capital goods can be removed after used. Now you are under SSI exemption limit and have not taken cenvat credit of inputs then no need to pay excise duty at the time of sale of inputs.

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