Finished goods burnt by fire- reg

[vinay wakde]

We are manufacturer finished goods namely Direct Reduced Iron (DRI) i.e. Sponge Iron (CH No. 7203 10 00). There was fire in our finished goods stock yard and we have submitted an application for remission of duty under Rule 21. We have now received a letter from the Department to reverse the CENVAT credit involved on duty paid inputs contained in finished goods with interest and brief report from us about the steps taken to avoid fire accident.

Presently, huge amount of Input service credit is accumulated in our Input service credit account. Kindly let us know whether accumulated credit of input services can be used to reverse the Excise duty involved in the Inputs/auxiliary chemicals contained in the finished goods i.e. DRI, burnt by fire? Kindly advise in the matter. As regards, the payment of interest, the same shall be paid by us in cash.

Regards,

VINAY

AI Summary

Cenvat credit reversal: inputs and input service credit must be reversed when duty remission is invoked, interest payable in cash.
Where duty on manufactured goods is ordered to be remitted under the remission procedure, the manufacturer must reverse the CENVAT credit taken on inputs used in the manufacture of those goods and the CENVAT credit on input services used in or in relation to such manufacture; the amount due may be paid by debiting the CENVAT account, delays attract interest and interest must be paid in cash.