REVERSAL OF 6% DUTY REGARDING.

[SANJEEV JADHAV]

Dear Sirs, As per Serial No. 233 (1) of Notification No. 12/2012 - CE dated 17.03.2012, condition No. 23, we have received certificate from Collector & District Magistrate Khordha. As per column 4 in said notification, duty is Nil. Please confirm whether we have to reverse 6% cenvat credit on value, as we are unable to maintain separate record.

[Ganeshan Kalyani]

Yes reversal need to be done.

[KASTURI SETHI]

I agree with the views of Sh.Ganeshan Kalyani, Sir.

[YAGAY and SUN]

Dear Sanjeev,

Rule 6 (6) of the CENVAT credit Rules, 2004 enumerates that 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-

⁶[(i) cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorized operations; or]

(ii) cleared to a hundred per cent. export-oriented undertaking; or

(iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or

(iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95-Central Excise, dated the 28th August, 1995, number G. S R. 602 (E), dated the 28th August, 1995; or

⁹[(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of ²⁸[12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012] or]

(v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or

(vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or.

⁸[(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to theCustoms Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of thesaid 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 of²⁹[12/2012-Central Excise, dated the 17th March, 2012]]

³⁰[(viii) supplies made for setting up of solar power generation projects or facilities]

⁴⁰[(ix) Ethanol produced from molasses generated from cane crushed in the sugar season 2015-16 i.e. 1^st October, 2015 onwards, for supply to the public sector oil marketing companies, namely, Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. or Bharat Petroleum Corporation Ltd., for the purposes of blending with petrol, in terms of the provisions of S.No.40A of the Table in notification No.12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated that 17th March, 2012. ]

If your supplies are against any one the clause as described above, then you need not to pay an amount @ 6% otherwise you are required to reverse the amount.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

Sir,

It appears that the goods are to be cleared for use in the setting up of a water treatment plant.

Hence, 6 % reversal shall be required to be made, subject to the provisions of rule 6 (6) of CCR, 2004, as detailed above.

[KASTURI SETHI]

Sh.Mahir S.

Yes. Serial No. 233 (1) of Notification No. 12/2012 - CE dated 17.03.2012 talks of machinery to be set up for water treatment only. This object does not find place in this notification. Also thanks to M/s.YAGAY and SUN for thought provoking idea as well as information.

[Mahir S]

Exactly Right, Sir.

[SANJEEV JADHAV]

Dear Sirs, Many thanks to all of you for your valuable suggestions.

AI Summary

Reversal of cenvat credit required where nil-duty removal falls outside rule exceptions, obliging tax reversal despite nil invoicing.
Obligation to reverse cenvat credit arises where an excisable goods removal that is shown as nil duty under a notification is not covered by the enumerated exemptions in Rule 6(6) of the CENVAT Credit Rules, 2004. The Rule lists limited categories of exempt removals-such as certain export, bonded, international, diplomatic, and project supplies-where reversal provisions do not apply; removals for other purposes, including machinery for a water treatment plant not falling within those categories, require reversal.