Remission of duty -reversal of credit on inputs & Input services - reg

[vinay wakde]

As per Rule 3(5C) of the CCR, 2004 as amended, it is required to reverse the CENVAT credit availed on inputs as well as on input services which are used in the manufacture or production of goods where the duty is ordered to be remitted under Rule 21 of the Central Excise Rules,2002.

We have calculated duty to be reversed on inputs, based on quantity consumed in the manufacture of finished goods but we find it difficult to calculate duty reversal in respect of credit taken on Input services. If the fire incidence occurs on 16^th March, 2015, kindly guide us method to be followed to calculate reversal of credit on input services.

Regards,

VINAY

[KASTURI SETHI]

Dear Sh.-Vinay Wakde Ji,

You will have to consult Cost Accountant or Chartered Accountant.How much input service credit is to be reversed is to be worked out and certified by CA or Cost Accountant. The department accepts such certificate. In this context, Board's Circular No. 120/01/2010-S.T., dated 19-1-2010 refers. Though this circular pertains to refund claim, yet it is relevant to solve your problem.

[Suryanarayana Sathineni]

Dear Mr. Vinay,

I concur with the views expressed by shri. Kasturi Swethi Ji.

The requirement of reversal of proportionate credit taken on input services is included from 2014 only.

The term is very specific about reversal of proportionate credit of input services used in the production of remitted goods and hence, if you are able to identify such services then it can be worked out and if not it is the best option to obtain a certificate from a cost accountant.

I am of the view that in general, any Service Tax paid on freight charges or CHA and import related charges if any paid on the material used in such remitted products required to be considered. But as an abundant caution, it is advisable to consider the common input services like security, ETP etc., to be included on proportionate basis considering the month in which the remitted product is manufactured while obtaining the CA certificate.

Best Regards

Suryanarayana

[KASTURI SETHI]

Sh. Surya Narayana Ji,

Thanks for enrichment of knowledge, Sir.

[Ganeshan Kalyani]

Nicely explained by Sri Kasturi Sir and Sri Surya ji. Thanks.

AI Summary

Reversal of CENVAT credit required when duty on goods is remitted; input-service reversal should be certified and apportioned. Reversal of CENVAT credit on inputs and input services is required when duty on goods is remitted under Rule 3(5C); the portion of credit attributable to remitted goods must be identified and reversed. If input services cannot be specifically identified, a Cost Accountant or Chartered Accountant should compute and certify the proportionate reversal. Practical allocation may include freight, CHA and import-related charges and common services, apportioned by reference to the month of manufacture of the remitted goods, and the department ordinarily accepts such professional certification.