Eou-applicability of rule 6 of ccr2004

[arbs sarma]

Sirs,

1. Ours is a100% EOU. We are manufacturing both dutiable and exempted goods. We are availing cenvat on common inputs. We dont have domestic clearances. Does the provisions of rule 6 applicable in our case i.e., to EOU.

2. We are exporting our final product exempted in terms of notfn no. 12/2012-ce, under B17 bond. Is it correct. If yes, can we consider the value of exempted goods in export turnover while filing refund under rule 5 of ccr, 2004.

[KASTURI SETHI]

1. NO. Rule 6 (1),(2) (3) & (4) are not applicable to 100% EOU.

2. Bond is executed to protect Govt. revenue. When goods are exempted from CE duty, there is no logic to execute bond and clear the goods under bond. No requirement of law.

3. Yes. Rule 5(1) (E) of Cenvat Credit Rules,2004.

[arbs sarma]

Dear Kasturi Sethi Sir,

Thanks for your reply.

In terms of Rule 5 (1)E of CCR, value of exempted goods must be considered in total turnover.

Refund amount = (Export turnover of goods+ Export turnover of services) x Net CENVAT credit

Total turnover

My doubt is, can we include value of exempted goods exported by EOU, in Export Turnover of goods i.e., in Rule 5(1) C.

[KASTURI SETHI]

Sh.Sharma Ji,

The value of exempted exported goods is to be taken into account for computation of "Total Turnover" only and NOT for 'Export Turnover of the goods for the purpose of refund claim under Rule 5CCRs.

AI Summary

Inclusion of exempted goods in turnover affects refund calculations; include in total turnover but not in export turnover. Rule 6 of the Cenvat Credit Rules does not apply to a unit operating as a 100% EOU with no domestic clearances; bonds need not be executed for goods exempt from central excise. For refund under Rule 5(1)(e), the value of exempted exported goods is to be included in Total Turnover but excluded from the Export Turnover of goods used in the refund calculation.