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

Input service credit need not be reversed when inputs or capital goods removed as such under Rule 3(5).
Rule 3(5) directs payment equal to credit availed for inputs or capital goods removed as such, and its language and tribunal practice treat the reversal obligation as applying to goods rather than to input services, so CENVAT on input services used in the factory need not be reversed when goods are removed as such.