Rule 6 of CENVAT credit rule 2004 applicability in case of trading in non-excisable goods

[Yatin Bhopi]

A manufacturer is also doing trading in non-excisable goods. As per recent amendment in rule 6 of CENVAT credit rules 2004. Manufacturer or Service provider shall follow any one option from either 1) pay 6%/7% or 2) pay an amount as determined under sub-rule (3A)

As per Section 66D (e) Trading is the exempted service.

In this case if we go for 1^st option are we need to pay 6% or 7% of value?

Please share your views.

[Suryanarayana Sathineni]

Dear Friend,

According to my remembarance ,for the purpose of Rule 6 of CCR,2004 non excisable goods also covered. However, since you are carrying Trading activity your are under obligation to comply with the options of Rule 6 and you have to reverse/pay 7% being the Trading is a service activity.

Best Regards

Suryanarayana

[Yatin Bhopi]

Thanks Sir

AI Summary

CENVAT Rule 6 compliance: traders in non excisable goods must choose the prescribed percentage payment or the sub rule alternative. Rule 6 of the CENVAT Credit Rules, 2004 applies to a manufacturer trading in non excisable goods and requires choosing between a prescribed percentage payment or an amount under sub rule (3A). Because trading is an exempt service under Section 66D(e), the practitioner's view-reflected in the source-is that the trader manufacturer must comply with Rule 6 and apply the percentage applicable to trading when selecting the percentage payment option.