same inputs used for manufacture and processing

[Dalia Felix]

We are registered with the Excise department as 'manufacturer of excisable goods'. It is also possible to conduct certain processes not amounting to manufacture on the inputs purchased and clear them at a higher price. We generally take full cenvat credit of the excise duty paid on purchasing the inputs. Thus, common inputs are used for the manufacture of excisable goods and also removed after partial processing.

Thus, inputs are not 'cleared as such'; but after partial processing. Since the processing does not amount to manufacture, excise duty is not collected.

What is the amount of excise duty to be reversed when the partially processed inputs are removed?

What are procedures to be followed so that the excise duty paid on the inputs are available to us or the purchaser (of the value added inputs) as CENVAT Credit?

What about the applicability of Rule 6 of CENVAT Credit rules on these types of transactions?

AI Summary

Company Seeks Guidance on Excise Duty Reversal for Partially Processed Inputs Under Rule 6 of CENVAT Credit Rules A discussion on a forum addresses the excise duty implications for a company registered as a manufacturer of excisable goods, which also conducts processes not amounting to manufacture on inputs. The company seeks guidance on reversing excise duty for partially processed inputs and the applicability of Rule 6 of CENVAT Credit Rules. Responses suggest collecting service tax for non-manufacturing processes, reversing proportionate input credit, or maintaining separate accounts for manufacturing and trading activities. Options under Rule 6(3) include reversing CENVAT credit proportionately or paying a 6% duty on exempted goods.