Reversal of Cenvat credit under Rule 6(3D)(c) of CCR 2004/reversal of input service credit under Rule 3(5) on

[VINOD KUMAR]

Dear Experts,
(1)Is a manufacturer required to reverse 6% Cenvat Credit of 'sale value-cost of goods sold' in terms of Rule 6(3D)(c) of CCR 2004 for 'removal of inputs as such' i.e. can it be equated with the 'Trading of goods' mentioned in Section 66D(e) (exempted service). The volume of 'removal of inputs as such' is 30% to total sales of manufacturer.

(2) Rule 3(5) of CCR 2004 uses 'in respect of such inputs' and not 'on such inputs'. Is the decision of Chandigarh High court [ reported in 2010 (260) E.L.T. 521 (P and H)] = 2010 (7) TMI 252 - PUNJAB AND HARYANA HIGH COURT still applicable i.e. whether the reversal of input service credit also required on removal of inputs as such. Whether any contrary decision of Tribunal/HC also available which says that reversal of input service credit is required on 'removal of inputs as such'

(3) In which financial statement the exact value of 'trading of goods' be obtained i.e. from Balance Sheet or Trial Balance or Profit and Loss account.

[Tax Baniya]

Manufacturer will be required to reverse the credit on input not utilized in 6 month, after budget 2015 time limit is 12 month. you can visit here for full provision taxbaniya.com.

AI Summary

Reversal of Cenvat credit required for inputs not used within prescribed period; query remains on service credit reversal for removed inputs. The core operative position recorded is that a manufacturer must reverse credit on inputs not utilised within the prescribed utilisation period; a subsequent budget amendment extended that time limit. The response directs to an external source for full provisions but does not resolve whether reversal of input service credit is required on removal of inputs as such nor specify which financial statement should determine the value of goods treated as trading.