Pmt/reversal of cenvat credit-final product is exempt ?

This query is : Resolved

CA Abhishek Singh (Querist)
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11 September 2011 if a mfr has been taking CENVAT credit on inputs or Input services, subsequently opts for 100% exemption from excise duty/service tax.

A . he shall be required to pay an amount equivalent to CENVAT credit if any taken by him in respects of inputs-
-lying in stok,
-lying in process,
-contained in final products lying in stock
-contained in taxable services to be provided

on the date when such exemption is opted for/granted

B. after deducting the said amt bal. credit shall lapse.

i m unable to understand practically how it will be done. i mean in respect of every inputs wheter it is consumed in FG/wip etc. it will show bal in receivable a/c & we have to reverse full amt then how can there be balance. i have seen illustration but still i am unable to understand it logically. please someone explain me the logic behind this preferably by passing journal entries.

WAITING URGENLTY FOR YOUR REPLY.

CA Ankit Gulgulia (Jain)

CA Ankit Gulgulia (Jain) (Expert)
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11 September 2011 Please refer my explanation below for its practicality.

First of all , i believe to phrase "balance" is inserted in law to ensure comprehensiveness of the provision and ensure no cenvat credit can be availed in any sense of possibility.

Practically , A lot companies pay Service tax / Excise from PLA/Cash even desspite Cenvat credit availability. Ofcourse , law does not debars it too.

So Practically i can say , that the balannce in CCR(Cenvat Credit) A/C > Cenvat lying in Stock/WIP/FG etc.

I think this is one dimension of logical reasoning.

Regards
Ankit Gulgulia

CMA Gul S

CMA Gul S (Expert)
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11 September 2011 Hello Mr Abhishek,

I feel it is not possible to take cenvat credit, and the word balance is more generic in nature in the definition. Many Business Units/ organisations pay all forms of taxes despite of being availabilty of CENVAT.

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