Trading of goods- service before April 01, 2011

[VINOD KUMAR]

Is trading of goods is classifiable under service or exempted service before April 01, 2011 and whether rule 6 of CCR 2004 is also applicable before April 01, 2011.If so, please quote relevant statutory provisions.

[Madhukar N Hiregange]

It should not be so. However I understand that Tribunals are leaning on saying it is. In fact I understand that at times they are saying that it is proportionate and the 10% formula is not applicable.!!

It is a fact that in providing services more services would be consumed and in manufacturing some amount and in trading very less. The law had recognised that and now understanding that the proportion is less the 10% rule has been introduced.

[VINOD KUMAR]

Thank you sir for your valuable reply.

AI Summary

Clarification Sought on Trading Classification Pre-April 2011: Service or Exempted? Rule 6 of CENVAT Credit Rules 2004 Applicability A query was raised about whether the trading of goods was classified as a service or exempted service before April 1, 2011, and if Rule 6 of the CENVAT Credit Rules 2004 applied before that date. One respondent indicated that tribunals have sometimes classified trading as a service, suggesting the 10% rule is not applicable due to the lesser proportion of services consumed in trading compared to manufacturing. The inquirer expressed gratitude for the response.