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TMI Blogcenvat credit availment on dutiable and exempted productX X X X Extracts X X X X X X X X Extracts X X X X ..... A company has two units, one for the manufacture of sugar and the other is distillery unit. In the course of manufacture of sugar, molassess comes as a bye-product which is cleared on payment of duty and has been utilised in the manufacture of varieties of Ethyl Alcohol - Rectified Spirit and Neutral Spirit (RSNS) (non dutiable) and Denatured Spirit (DNS). The carbondioxide which emerges, has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so been cleared on payment of duty. The company has been taking credit on the duty paid on molasses and expunging the same towards RSNS. They are paying duty for the clearance of DNS and CO2. They have opted under Rule 6(3)(ii) of Cenvat Credit Rules, 2004 and paying duty for RSNS at the proportionate rate. They are using the formula as below Amt.expunged = Total qty. ofMolasses consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed X Total qty. of RSNS produced ------------------------------------------------------------------------------ Total quantity of RSNS DNS produced The Audit have objected to this method and the assessee started paying duty on the assessable value of RSNS by opting under Rule 65(3)(i) of CCR,2004. By opting under Rule 6(3)(i) of CCR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2004 the assessee is getting benefit compared to the proportionate expungement. The Molasses consumed in the manufacture of RSNS is almost 90%. The question is whether the credit can be allowed on molasses, as RSNS is non excisable. Whether the stand of the assessee for option under Rule 6(3)(i) is correct - Reply By Mangesh Lokre - The Reply = You can avail the Cenvat Credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dutiable goods used in manufacture of both dutiable and exempted goods. 1. Either you keep seperate account for the goods/services used in manufacture of the Exempted goods and reverse the cenvat to that extend. 2. Or you can simply pay 5% value ( 6% value in case of output service ) from Cenvat. The second option is very benefitial. You may opt this instead of paying the duty as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the formula stated above. - Reply By Seetharaman K C - The Reply = The best way out would be to pay 5% on value of exempted goods and 6% on value of exempted services, once this is done the question of any dispute on availament of Cenvat credit would not arise - Reply By Ramaiah Swamy - The Reply = good evening mr. vasudevan, 1. It is not which option is beneficial that decides the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cceptance or rejection of the option exercised by the assessee in the instant case 2. It is whether the assessee has exercised the option ( 5% amount pay up or proportionate credit ) validly or not 3. If the option is valid, going for 5% reversal or proportionate credit route at the assessee's option , the assessee complies the CCR mandate 4. If above 3 steps are applied, the problem in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your case should be over With best wishes Rangaswamy - cenvat credit availment on dutiable and exempted product - Query Started By: - vasudevan sudharsanam Dated:- 2-2-2011 Central Excise - Got 3 Replies - Central Excise - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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