Difference between rule 6(1) and 6(3)

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Dear Experts, What is the difference between Rule 6(1) and Rule 6(3) of cenvat credit rule 2004. Which rule is best for us if we are removing excisable goods and exempted services(Trading Goods) without keeping seperate record. Thanks
Replies (3)

Rule 6(1) provides that no Cenvat Credit be allowed on 'inputs' or 'input services' used in manufacture of exempted goods or for provision of exempted services.

Rule 6(3) provides for payment of a amount (to be determined as per provisions thereunder) in case where the manufacturer manufactures dutiable as well as exempted goods and a service provider provides taxable as well as exempted services.

As regards the best rule applicable in your case, it is advisable that, you determine the amount payable, under Rule 6(3A) of the Cenvat Credit Rules, 2004.

Whether Trading Export  to be considered as an Exempted Service and rule 6(3) will be apply.

Thanks

As per Rule 6(6) of Cenvat Credit Rules, 2004 "The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are -

(v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002;

Thus, the Cenvat Credit reversal is not required to be made for Export Trading.

Though 'Trading Export'  is considered as an Exempted Service, no reversal under Rule 6(3) is required to be made.

 


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