Reversal of cenvat credit under rule 6 of CCR 2004

[VINOD KUMAR]

Dear Experts,Good afternoon.Sir Rule 6 of CCR 2004 says:-"(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either-(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of the said Customs Tariff Act when imported into India and are supplied, (a) against International Competitive Bidding; or (b) to a power project from which power supply has been tied up through tariff based competitive bidding; or (c) to a power project awarded to a developer through tariff based competitive bidding, in terms of 12/2012-Central Excise, dated the 17th March, 2012]]".Now, the query is:-1. Whether this benefit is available to an Indian manufacturer who supplies his own manufactured goods (without importation) against ICB. My Range Officer Says that this benefit is available only for items those have been imported (emphasis supplied on "When imported into India").2. whether this benefit is available to all the manufacturers who supplies the goods to a specified Mega Power Project. In my opinion, this benefit is available only to project imports (Tariff heading 9801) by virtue of Sl. No. 507 of Notf No. 12/2012-Cus. I could not find any other notification which grants exemption of BCD and CVD to the supply to Mega Power Project.

[Rajagopalan Ranganathan]

Sir,

In my opinion all goods manufactured in India and supplied-

(a) against International Competitive Bidding; or

(b) to a power project from which power supply has been tied up through tariff based competitive bidding; or

(c) to a power project awarded to a developer through tariff based competitive bidding, in terms of 12/2012-Central Excise, dated the 17th March, 2012 are exempted from payment of duty. Under rule 6 (1), (2) and (3) credit availed on inputs and input services in respect of the goods supplied as indicated above shall not be availed or 6% of the value of exempted goods to be paid back or proportionate credit is to be reversed. However in respect of supplies made to projects indicated against (a), (b) and (c) you need not reverse or pay back or not to avail the credit. The goods supplied should be like goods exempted under Customs Act or Customs Tariff Act when imported into India. Moreover Cenvat Credit Rules 2004 is applicable to goods manufactured in India and not to goods imported into India. In respect of imported inputs in respect of which CVD and SAD paid are availed as credit. you need not reverse the same when goods manufactured out of imported inputs are supplied to projects mentioned against (a), (b) and (c).

[PAWAN KUMAR]

Dear Sir,

As per my view, goods can be supplied on exemption of duty of excise subject to fulfilment of condition specified under particular serial No. which you have chosen. If you are supplying goods to mega power project under s.No.336 of notification No.12/2012-C.E. dated 17.03.2012, according to condition 41 specified for this serial 336 is : imporatation of similar goods should be customs duty exempt under customs notification.

Therefore YOu need to choose s.No.336 if you are planning to supply to mega power project.

AI Summary

Cenvat credit reversal: supplies under ICB or tariff based power projects may not require reversal if notification conditions are met.
The question is whether Rule 6 CCR 2004 requires reversal of Cenvat credit when domestically manufactured goods are supplied duty free under ICB or to tariff based power projects per Notification 12/2012. Experts state that such supplies, if they match goods exempt under customs when imported, are treated as exempt and typically do not attract the credit reversal or pay back provisions; Cenvat rules apply to domestically manufactured goods and CVD/SAD credit on imported inputs need not be reversed when the finished goods are supplied to those projects, subject to fulfilling notification serial conditions.