Eligibility of Cenvat credit used for export of goods

[AJAY KUMAR]

It may please be clarified whether the Cenvat credit need to be reversed in case when the final products are exported. It may also be clarified if the Inputs, as such, are removed from the factory for export, whether cenvat credit availed on such inputs have to be reversed or not. Because nowhere in the Cenvat Credit Rules, 2004 it is stated that Cenvat credit shall not be reversed if the goods are cleared without payment of duty for export.

[CSSANJAY MALHOTRA]

Refer to Rule 6(6) of CENVAT Credit Rules 2004 which clearly provides for non-reversal of CENVAT Credit if the Excisable goods are cleared for Export.

Indian Constitution also provides that the Taxes are not to be exported and hence the Exports are tax free. Any Tax paid on Inputs or Inputs services is either claimed as Rebate under under Rule 18 or 19 of Central Excise Rules 2002 or claimed as Refund as under Rule 5 of CCR 2004. Further CENVAT Credit can also be utilised against clearances of excisable goods in domestic market if the assessee does not want to go for Rebate / Refund option.

If the inputs are cleared as such in domestic market, then the duty equivalent to CENVAT availed is to be paid and as per Rule 3(4)(b), CENVAT Credit can be utilised for the payment of said duty.

Central Excise Circular No. 283 dated 31.12.96 in the erstwhile provided for non-reversal of CENVAT in case of Inputs cleared as such for Export.

 

 

AI Summary

Cenvat credit non-reversal for duty-free exports preserves rebate or refund and utilisation options for exporters. Cenvat credit need not be reversed when excisable goods are cleared for export without payment of duty; exporters can claim rebate or refund for duties on inputs and input services, or retain Cenvat credit for utilisation against domestic excisable clearances. If inputs are cleared as such into the domestic market, duty equivalent to the Cenvat availed must be paid, and Cenvat credit may be used for that payment.