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Utilization of cenvat credit

Onkar (Asstt. Audit Officer) (36 Points)

31 March 2012

Dear members

I want your expert view on the topic mentioned below

There is a provision to pay an amount 5% under Rule 6(3) of Cenvat Credit Rule. Certainly it is not duty of excise but it is an obligation on the manufacturer/ service provider in a specific condition.

Now, Rule 3(4) of Cenvat Credit Rule specify the payments in which cenvat credit may be utilized. In this rule there is no where mentioned for amount payable under Rule 6(3) but in explanation-II below Rule 6(3A) stipulates that this amount can be paid by utilizing Cenvat Credit. Thus this explanation is in contrary to rule 3(4) of Cenvat Credit Rules.

Pl. put a light on this issue.

Thank You

Onkar

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1 Replies

P.Bashista (Advocate) (367 Points)
Replied 25 April 2012

Basically Rule 6 is meant for those who manufacture both dutiable and exempted goods with the common duty paid inputs. The thumb rule of central excise is that you can utilise the cenvat on inputs only if your final product is dutiable. Rule 6 lays down the rules to maintain seperate accounts of the inputs used in the manufacturing of dutiable and non dutiable goods. But sometimes it is not possible to maintain seperate accounts. For such cases Rule 6(3) is given. So rule 6(3) is basically there to save this thumb rule.