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TMI Blogexempted materialX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Sir , Please clear , a company manufactureing exempted goods as well as dutiable goods , some inputs are commenlly used and some are exclusively used in exempted goods ,my question is whether we requier to pay 5% duty on the sale value of the exempted good excluding all taxes or reverse the credit of inputs exclusively used in exempted goods or both . Thanks - Reply By vijay ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar - The Reply = Dear sir, please refer to Rule 6 of Cenvat Credit Rules, 2004. No credit can be taken on inputs used exclusively for exempted goods. For common inputs, you have three options - (i) maintain separate accounts; (ii) pay 5% amount of the value of exempted goods cleared every month or (iii) proportionate reversal of credit provisionally on monthly basis and finally at the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. These options are independent of each other and you have to chose one of them. Option (iii) once exercised in a FY cannot be withdrawn during the remaining part of the FY. Hence you may chose the option which suits you the most. For more details you can contact your JRO. - Reply By NEERAJ KUMAR, RANCHI - The Reply = Dear Mr Singh I mention herebelow the provisions of Rule 6 of cenvat c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit rules which are applicable to you. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely:- (i) the manufacturer of goods shall pay an amount equal to five per cent. of value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exempted goods and the provider of output service shall pay an amount equal to six percent. of value of the exempted services; or (ii) the manufacturer of goods or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services subject to the conditions and procedure specifiedin sub-rule (3A). Explanation I. - If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the remaining part of the financial year. Explanation II.- For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service. Here I invite ur attention to the "or" highlighted in red. I hope this woul clarfify your doubt. In my opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion you need to follow either of the two option and not the both. With regards Neeraj - Reply By kothapally Raji Reddy - The Reply = Sir, It appears that you are under the impression that you are eligible for credit on the inputs used exclusively in the manufcature of exempted goods. If it is so, you can not take such credit in first place. Regarding credit on common inputs used both in du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiable goods and exempted goods,you can either pay 5% of the value of exempted goods or pay the credit attributable as the formula in Rule 6(3A)of CCR,2004. - Reply By pradeep khatri - The Reply = I do agree with the views of our experts. - exempted material - Query Started By: - sukhvinder singh Dated:- 8-8-2011 Central Excise - Got 4 Replies - Central Excise - Discussion Forum - Knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - 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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