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

AI Summary

Are Trading Exports Exempted Services Requiring CENVAT Credit Reversal Under Rule 6(3)? Clarification and Proportionate Reduction Explained A manufacturer and merchant exporter inquired whether trading exports are considered exempted services, requiring reversal of CENVAT credit under Rule 6(3) of the CENVAT Credit Rule 2004. An expert clarified that trading is an exempted activity, so CENVAT credit is not allowed for input services used exclusively for merchant exports. For common input services used for both manufacturing and trading, the input tax credit must be proportionately reduced based on turnover. Additionally, if a merchant exporter benefits from Duty Drawback, no other credit benefits are available. Another participant agreed with this view, and the inquirer sought further clarification on reversing CENVAT for common services.