Trading Export is Considered as Exempted Services

[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

[KASTURI SETHI]

Rule 6 (3) of Cenvat Credit Rules, 2004 is not applicable for trading goods exported.

[RAM SHARMA]

Dear Sir,

Please elaborate this with rules.

Thanks

[KASTURI SETHI]

Exported goods are to be treated as duty-paid goods. It is a fact.

[RAM SHARMA]

Dear Sir,

Trading Goods mention in negative list of service whether it is export or domestic. Hence it should exempted service and rule 6(3) should be apply for manufacturer.

Please advice.

Thanks

[Ganeshan Kalyani]

Sir, the same query was raised by you in the issue id #1Issue Id: - 110695
Dated: 28-7-2016

Thanks.

[KASTURI SETHI]

Sh.Ram Sharma Ji,

Be well conversant with the meaning of 'Export' and benefits attached with the export. Also search on cbec site or on google. If you cannot, then I shall come with authority on the issue.

[JSW CEMENTLIMITED]

In this Case I endorse the view expressed by Shri Kasturi Ji. It is a well settled fact that taxes should not be exported. If a trading goods are exported, any reversal would mean cost of export go up which is not the intention of legislature as it would make the Indian product in-compatible in the international market. I fully agree with Shri Karturi ji, that trading export should not be treated as exempt service and no reversal under Rule 6 (3) is required.

V.Venkat Raman

[JSW CEMENTLIMITED]

the Following case law maybe helpful.

2007 (12) TMI 209 - BOMBAY HIGH COURT

REPRO INDIA LTD. Versus UNION OF INDIA

Export of exempted goods - common inputs in dutiable goods and exempted goods - non-maintenance of separate accounts as contemplated by Rule 6(2) – held that in such case where goods are exported, direction by revenue to the petitioner to pay 10% of sale price of exempted goods u/r 6(3)(b) is not justified - If the exempted products are exported outside India the provisions of Rule 6(6)(v) of CCR are applicable. Therefore, the bar provided u/r 6(1) and the liability created u/r 6(3)(b) are not attracted – therefore, credit is available on “inputs used in mfg. of goods exported” even if goods are exempted

[KASTURI SETHI]

Sh.V.Venkat Raman Ji,

Thanks a lot, Sir, for echoing my views. I really appreciate your art of expression which always gives loud and clear message. What I miss, you do not appear on this forum regularly.

AI Summary

Trading export classification: exports not treated as exempt service, so no Cenvat reversal under Rule 6(3). Exports of trading goods are not to be treated as an exempted service for Cenvat reversal purposes; exported goods are treated as duty-free and manufacturers need not reverse Cenvat credit under the cited reversal mechanism. A judicial authority supports that, for exported exempted products, the specific reversal liability is not attracted and credit on inputs used in exported manufacture remains available.