Cenvat credit exempted goods/services (Trading Export)

[RAM SHARMA]

Dear Experts,

We are manufacturer cum merchant exporter, we are doing manufacturing sale and trading sale in domestic market as well as export market. whether our trading export will be treated as exempted service and cenvat to be reverse under rule 6(3) of cenvat credit rule 2004.

Please advice.

Thanks

[CSSANJAY MALHOTRA]

Trading is an exempted activity thus; no CENVAT credit is admissible in respect of input services which are exclusively used for merchant exports. On the other hand with regard to input services availed as common services, undertaken for both i.e. direct exports in capacity of manufacturer and as merchant exporter, the Input Tax Credit shall be reduced proportionately on the basis of turnover of each business vertical.

Moreover, If Merchant Exporter is availing benefit of Duty Drawback in respect of exports, he’s refunded duties of Customs, Excise & Service Tax and hence no other benefit is admissible.

[Ganeshan Kalyani]

Sir, I agree with the views submitted by Sri Sanjay Sir. Thanks.

[RAM SHARMA]

Dear Sir,

It means our some services will pertain to common input services like Rent and Bank charges etc. Hence we will reverse 7% cenvat on trading goods. Pl suggest whether the above mention services will our common input.

Thanks

AI Summary

Exempted trading exports require reversal of CENVAT credit for exclusively used inputs and proportionate credit for common services. Input services exclusively used for merchant exports are not eligible for CENVAT credit and must be reversed; common input services must have credit apportioned and reduced proportionately on the basis of turnover of each business vertical. A merchant exporter receiving duty drawback for exports is treated as refunded duties and taxes and cannot claim duplicate CENVAT benefit.