reversal of cenvat credit under rule 6

[VINOD KUMAR]

Dear Sirs,

We have cleared machinery items during the F.Y. 2013-14 and 2014-15 for setting up a project for generation of power using non-conventional materials. The said clearance is exempt by virtue of Notification No. 33/2005-CE dated 08-09-2005 and we have fulfilled the necessary conditions to claim exemption. Hence, we have cleared the items without payment of excise duty and without reversal of Cenvat Credit claiming the benefit of Rule 6(6)(vii)(b) and(c). But later on we came to know that the said clause is not applicable on us as such supply is not exempt from BCD and CVD which is pre-requisite to avail the benefit of Rule 6(6)(vii).

Now, the query arises whether we are required to reverse 6% Cenvat Credit on the above clearances having assessable value more than ₹ 2.5 Crores. We have not maintained Separate records under Rule 6(2) of CCR 2004. Please intimate whether we can claim benefit of Rule 6(6)(vii).

Thanks.

AI Summary

Reversal of Cenvat credit required where exemption lacks BCD and CVD; pay prescribed amount and VAT may apply.
Where Rule 6(6)(vii) conditions are not satisfied because the supply was not exempt from import duties, the supplier must reverse proportionate Cenvat credit or pay the prescribed excise-rule amount; the reversed amount may attract VAT if it is regarded as a statutory levy under state VAT law. Lack of separate records under the relevant accounting rule was identified as a compliance issue affecting reversal and assessment.