PAYMENT OF 6% DUTY ON TRADING ACTIVITY

[deepak VORA]

WE ARE A COMPANY REGISTERED UNDER EXCISE AND ARE INVOLVED IN PROCESSING OF EXCISABLE GOODS AND EXEMPTED GOODS AND ALSO INTO TRADING OF RAW MATERIALS.

WE DO NOT MAINTAIN SEPERATE BOOKS OF ACCOUNT FOR EXCISABLE AND EXEMPT GOODS HENCE WE PAY 12.50 % FOR EXCISABLE PRODUCT AND 6% FOR EXEMPT GOODS UNDER RULE 6.

FURTHER WE ALSO DO RR SALES OF RAW MATERIAL WHERE IN WE SELL THE GOODS IN TRANSIT WITHOUT RECEIPT OF MATERIAL AT OUR END RESULTANT WE DO NOT TAKE CENVAT CREDIT AND DO NOT CHARGE CENVAT CREDIT. DURING EXCISE AUDIT IT HAS BEEN PINTED OUT BY THE AUDITOR THAT WE NEED TO PAY 6% OF THE VALUE OF TRADING SALES.

PLEASE GUIDE AS WE ARE NOT TAKING ANY CENVAT CREDIT FOR THE TRADING GOODS SINCE THEY ARE SOLD AS SUCH IN TRANSIT AND SINCE WE DO NOT TAKE THE CENVAT CREDIT WE DO NOT PAY CENVAT OR CHARGE SERVICE TAX. SO IN THIS CASE ARE WE LIABLE TO REVERSE 6% OF CENVAT OR PAY SERVICE TAX ON THE TRADED GOODS

AI Summary

Cenvat reversal for trading sales required even if credit not availed, absent clear separate books.
Where raw materials are sold in transit and CENVAT credit has not been availed, the administrative position treats such trading sales as an exempted service for purposes of reversal under Rule 6(3) of the Cenvat Credit Rules, 2004, requiring reversal or payment unless separate books and clear substantiation demonstrate that credit was not taken.