Export of Imported inputs

[Pradeep Jain]

Sir,

We have made an import of components( Inputs) for making an engine. After some time sale of the said engine is stopped.

Now , we are having of inventory of imported components ( inputs). Our marketing Team has searched another independent foreign customer to buy ,as such ,the said unused components( inputs), . However price offered by the Foreign customer is less than 70% of imported price of the said inputs .

Now our query is that at the time of export , do we need to reverse the credit of the CVD, to that extent , taken at the time of import of the said inputs.?

Regards

Pradeep Jain

[MUKUND THAKKAR]

Rule 3(5) of Cenvat Credit Rules, 2004 provides that when raw material or machinery, on which CENVAT credit has been taken, are removed as such from the factory of manufacturer or premises of service provider, then in such a case, such manufacturer or service provider is required to reverse / pay an amount equal to CENVAT credit availed in respect of such raw material or machinery. The relevant text of Rule 3 (5) is reproduced below for your ready reference:

“(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shallpay an amount equal tothe credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9.”

If you are sales in lower price in such case you must be pay an amount equal to the credit availed. along with the CVD as well SAD amount also.

 

[Suryanarayana Sathineni]

Dear Pradeep,

Since you are intended to export the inputs, it can be done under LUT without payment of duty. Board clarified this situation long back and you may refer the said clarification. Right now I do not have the reference and I will try to provide the said clarification positively tomorrow.

Regards

Surya

[KASTURI SETHI]

Modvat Credit in respect of inputs on which credit is availed but the inputs are exported as such under bond - Utilisation

Circular No. 283/117/96-CX, dated 31-12-1996

[KASTURI SETHI]

2014 (312) E.L.T. 964 (G.O.I.) = 2013 (10) TMI 1311 - GOVERNMENT OF INDIA IN RE : LARSEN & TOUBRO LTD.

AI Summary

Cenvat credit reversal may be required when imported inputs are removed as such; LUT export offers an alternative without duty. When inputs or capital goods on which CENVAT credit has been availed are removed as such from the factory or premises, the manufacturer or service provider shall pay an amount equal to the credit availed; this obligation may extend to countervailing and special additional duties. Alternatively, export of such inputs under a Letter of Undertaking without payment of duty has been administratively recognised and is supported by circulars on credit utilisation for inputs exported as such.