Removal of goods i.e. Input, Capital Goods as such -

[vinay wakde]

We are manufacturer as well as service provider. We are taking credit on Input, Capital Goods & Input services. We have cleared Input and Capital Goods as such and reversed proportionate credit taken on input /Capital goods as per Rule 3(5) of CCR,2004. However, we have not reversed proportionate credit taken on Input services.

We have now asked by the Department to submit details for last three years i.e. for as such removal of Input & Capital goods from the factory. As per the Department such kind of routing of input/Capital Goods to second manufacturer, getting extra credit of input services to the first manufacturer.

Kindly let us know (1) whether proportionate credit taken on input services required to be reversed (2) How to calculate Input service credit involved on removal of input & capital goods as such (3) whether the Department raised demand for recovery of duty (4) Is there any case law in our support to reply the letter.

Regards,

VINAY

AI Summary

Manufacturer Questions Input Service Credit Reversal for Past Clearances under Cenvat Credit Rule 3(5); Weighs Litigation Costs A manufacturer and service provider sought advice on whether they need to reverse the proportionate credit taken on input services when clearing input and capital goods as per Rule 3(5) of the Cenvat Credit Rules, 2004. The Department requested details for the past three years, alleging extra credit of input services. Respondents clarified that reversal of input service credit is not mandated by the rule, citing case law supporting this interpretation. They advised against contesting if the disputed amount is minimal due to high litigation costs. The consensus was to reverse the credit only if financially prudent.