Dear Sir,
We are manufacturer Exporter.
Our major Input is Cotton Yarn. We are procuring Yarn from local market at NIL rate of CEx Duty (being most of the yarn manufacturers and working under Notfn. 30/2004 CE) as well as importing from various countries on payment of Customs Duty and also availing CENVAT of CVD/SED.
We have Exported some quantity of Yarn (our Input) and it is shown as 'Traded Goods' in our Financial Reports.
Now C.Ex. department is demanding 6% Reversal of Service Tax Credit as per Rule 6(3) of CCR 2004 being trading activityis now EXEMPTED SERVICE even though the GOODS are Exported under Bond (Para 3.4 of Chapter 5 of CBEC Manual-Supplementary Instructions)
Please advice.
Manufacturer-Exporter Exempt from 6% Service Tax Credit Reversal Under Rule 6(6)(v), Exported Goods Not Considered Exempt Services A manufacturer-exporter inquired about a demand from the Central Excise department for a 6% reversal of Service Tax Credit due to their trading activities being classified as exempt services, despite exporting goods under bond. Responses highlighted that Rule 6(6)(v) of the Cenvat Credit Rules, 2004, indicates that the value of exported goods should not be considered for such reversals. It was clarified that no reversal is needed as exports are duty-free, and Rule 6A(1)(c) regarding export of services does not apply. Concerns were raised about availing CENVAT Credit on common input services and duty drawbacks. (AI Summary)
TaxTMI 
TaxTMI 
TaxTMI 
