Rule 6(3a)

[saraswathi P]

Dear Sir,

As per Rule 6(3a) for reversal of Input cenvat credit on exempted goods sale or exempted service, as per formula Total exempted sales + service divided by total sales x total input cenvat credit availed during the month. Pls let me know total input cenvat credit availed during the month includes credit taken on the capital goods ??

 

[YAGAY andSUN]

No, it is settled legal position that if the assesse is using the capital goods in manufacturing of exempted and dutiable goods then there is no requirement to reverse the CENVAT credit proportionately under Rule 6(3a) of the Cenvat Credit Rule, 2004 as amended from time to time.

AI Summary

Cenvat credit reversal: credit on capital goods need not be proportionately reversed when used for exempted and dutiable manufacture. Where capital goods are used in the manufacture of both exempted and dutiable goods, credit on such capital goods need not be reversed proportionately under Rule 6(3a); the rule's proportional reversal obligation applies to input credit attributable to exempted supplies, not to CENVAT credit on capital goods used across both categories.