Rule 3(5) of cenvat credit

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CA PRATEEK CHOUDHARY

EXECUTIVE

94 Points Joined August 2009

Dear All

Can anybody explain me concept of "pay an amount equal to the credit availed" in rule 3(5) of cenvat credit rules,2004.

Pay here means actually payment through PLA or reversal of the input credit taken??

If possible please explain with the help of a JOURNAL ENTRY.

Response awaited.

Thanks

Prateek

Replies (2)

Ramesh kumar

Manager - Central Excise

126 Points Joined April 2010

Payment pay an equal amount of credit availed on goods when goods are removed as such under rule 3(5) of Cenvat credit rules,2004 because there is no manufacturing activity, and there is no value addition & it is also not considered as trading activity, what inputs are come as well as same has goes.

You have to pay through either cenvat credit or cash(PLA).

CA PRATEEK CHOUDHARY

EXECUTIVE

94 Points Joined August 2009

Pay through cenvat means reversing the credit taken at the time of receipt of material??? Nd in same case when inputs are removed can excise be charged from buyer (in my case the credit taken has been charged in bill while selling the input material)??logically it shouldnot as it is not a manufacturer bt is it correct to do so???