MFG UNIT DONE RM AS SUCH SALES WHETHER IT UNDER EXTRA DUTY 10% OF RM SALE VALUE PL CONFIRM

[nandankumar roy]

DEAR SIR,

PL CONFIRM AS A MFG UNIT SALES RM WHERE DUTY PASSED AS PER RECEIPT OF CENVAT BUT AUDIT PERSON SAYING YOU HAVE TO PAY DUTY FURTHER 10% OF RM VALUE AS BILLING TO OTHER WITHIN 5% MARGIN AND PL CONFIRM WHETHER IS UNDER RULE 6 OF CENVAT IF NOT UNDER WHICH RULE

[YAGAY andSUN]

Dear Nandan Kumar,

Removal of inputs as such by the manufacturers cannot be treated at par with the trading activities, though trading overrides on removal of inputs as such to some extent. If removal of inputs as such is not a matter of routine then Department view of paying of an amount would not be sustainable.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

Removal of inputs as such not equated to trading; additional duty demand unsustainable when removal is not routine. Removal of inputs as such by a manufacturer is not equivalent to trading merely because duty credit was passed; if such removals are not routine, departmental demands for additional levy are unsustainable and characterization depends on the regularity and commercial nature of the transactions rather than the mere passing of Cenvat credit.