Is rule applicable for 100% eou

Dear All,

I need a clarification for the following issues -

There is a unit which is a 100% EOU, they use Furnace oil for production of steam and heat for the manufacture of final product.

The final product is taxable if sold in India, just because of EOU lable the final product is not charged to tax.

The question is-

1. can I take 100% input credit of services and input credit of excise for the materials used in the manufacture of the final product, or

Does Rule 6 of CCR apply, i.e proportionate credit is available.

(As Rule 6 status, if the company has both exempted goods and taxable goods then proportinate basis credit needs to be taken, but in this cases "goods" are not exempted or subject to "Nil rate of duty", the goods is very much taxable just becuase of EOU lable they are not subject to excise duty.)

2. Can I take input credit for consumption of Furnace oil? (they are not visible in the final product.)

I request if anyone can help on this and reply at the earliest.

Rgds,

JKC

Originally posted by : Jitendra Kumar Chopra
	Dear All, I need a clarification for the following issues - There is a unit which is a 100% EOU, they use Furnace oil for production of steam and heat for the manufacture of final product. The final product is taxable if sold in India, just because of EOU lable the final product is not charged to tax. The question is- 1. can I take 100% input credit of services and input credit of excise for the materials used in the manufacture of the final product, or Does Rule 6 of CCR apply, i.e proportionate credit is available. (As Rule 6 status, if the company has both exempted goods and taxable goods then proportinate basis credit needs to be taken, but in this cases "goods" are not exempted or subject to "Nil rate of duty", the goods is very much taxable just becuase of EOU lable they are not subject to excise duty.) 2. Can I take input credit for consumption of Furnace oil? (they are not visible in the final product.) I request if anyone can help on this and reply at the earliest. Rgds, JKC

1. Yes. yuo can take 100% input credit of furnace oil used for manufacturing exciseable goods.

as per rule 3(4) an manufacturer can take credit of input tax even he is covered under exemption notfication No. 56/2002-CE, dated 14th November, 2002.

2. yes as per cenvat rule u can take cenvat credit of material used in manufacturing even it is not visible in final product.

and it is obivious that if cenvat can claim on input services than also can on material which are directly used for manufcturing of product.