CENVAT Credit for manufacturer of Dutaibale & exempted goods

This query is : Resolved

Santosh (Querist)
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15 November 2010 Hi,

As per rule 6, the manufacturer of dutaible & exempted goods shall maintain the seperate records for inventory & take the CENVAT credit involved in the input used in the manufacture of dutiable goods.

If he does nto maintain the seperate accounts, then plz suggest what will be the cenvat treatment considering the following example

Example :- Co. ABC is producing Goods A(Dutiable) & Goods B(Exempted). The turnover is 60 for Goods A & 40 for Goods B.

Tilak Agrawal

Tilak Agrawal (Expert)
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15 November 2010 Dear Santosh

Some of the assessees has the practice of not maintaining separate accounts and instead are reversing credits on materials used for exempted activity on the basis of the Bill of Material and requisition reports after full credits had been availed initially at the time of receipt.

Where this was found to be too tedious, then the assessees had no option but to follow the prescription laid down by Rule 6 and that was, payment of 10% { now I think it is 5% plz confirm } of the value of exempted goods. In your Case 40 * 5% = 2

Santosh

Santosh (Querist)
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15 November 2010 ok. But what about the CENVAT involved in 60. Can company take credit of it proportionately?

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Tilak Agrawal

Tilak Agrawal (Expert)
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15 November 2010 Take CENVAT Credit of all the inputs whether used for manufacture of dutiable goods or exempted goods.

Pay 5 % of the value of exempted goods.

RENGARAJ R.K

RENGARAJ R.K (Expert)
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01 August 2012 The rate of reversal under rule 6 (3) is now 6% with effect from 01.04.2012.

6. In rule 6 of the said rules,-
(a) in sub-rule (3),-
(i) in clause (i), for the words ―five per cent.‖, the words ―six per cent.‖
shall be substituted;
(ii) in the second proviso, for the words ―five per cent.‖, the words ―six per
cent.‖ shall be substituted;