How percentage to be derived for cenvat credit(Rule 6 of the Cenvat Credit Rules 2004) on common inputs in the following case:
Total quantity removed : 100
Nil duty removed : 2
Export removal : 3
Duty paid removal : 95
Whether %age will be 2/97*100 or 2/100*100. Please note that export movement is without duty payment.
Please help
Credit to be reversed is total credit x 2/100. Export wihtout duty is considered as duty paid clearnce. But if exported goods bear nil rate or otherwise wholly exempted, cenvat credit is to be reversed.
As per Rule 6(3) of CCR 2004 as amended in Finance act 2011 in case of common inputs used for manufacturing of dutiable and excempted goods, than pay an amount equal to 5% of the value of excempted goods. Export not covered under this rule.
Regards
Dayananda
I am in confusion because of two different opinion on my query. Any one can provide further clarification will be helpful and clear my doubt.
| Originally posted by : BHASKAR MUKHERJEE | ||
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I am in confusion because of two different opinion on my query. Any one can provide further clarification will be helpful and clear my doubt. |
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Exports under cover of B-1 bond and ARE-1 cover, is to be treated as dutiable clearance. in absence of these procedure it should be either duty free or duty paid. check your export clearance and sub heading used.
reply of Mr Nair is according to laws when the quantity is ascertained by the manufacturrer that how much of input is used under the tax free clearances, and duty is to be reversed on that basis.
reply of Dayananda is also as per laws when the quantity is not ascertained and 100% input credit is availed, hence the duty free clearance would attract 5% duty reversal of the duty free clearance value.
As per Rule 6(3) of CCR 2004 as amended in Finance act 2011 in case of common inputs used for manufacturing of dutiable and excempted goods, than pay an amount equal to 5% of the value of excempted goods.
But, in case of ascertained quantity of Input and Input Service and you do not wish to go with the 5% reversal Rule 6(3) A will come in role as calculated in Query.
But, the One option taken in the Finalcial Year can not be changed and the same has to be intimated to the Local Excise Authorities. If No option is taken and you are not maintaining the Saperate records of receipt of Input and Inputservice as per Rule 6(2) automatically the Rule 6(3) of CCR come in role.
Mr.Bhaskar,
on the said subject, Sub Rule 3(A) (iii), Rule 6 of Cenvat Credit Rules 2004 will apply. this is specificaly for for common input cenvat credit bifurcation and bifurcation formula is as follow:
"The amount attributable to input services used in or in relation to manufacture of exempted goods and their clearanceup to the place of removal or provision of expempted services = (E/F) multiplied by G, where E denotes total value of exempted services provided plus total value of exempted goods manufactured and removed during the preceeding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured & removed, during the preceeding financial year, and G denotes total cenvat credit taken on input service during the month."
So bifurcate your total cenvat credit input accordingly.
CAclubindia
