Cenvat Credit on Deemed Export

[Mr.KISHOR RAJGARIA]

This is in relation to the availment of CENVAT Credit on inputs used in manufacturing of goods which are supplied against ICB.

As per N 6/2006 CE - Supply against ICB is exempt from Central Excise Duty. Also as per FTP supplies against ICB is considered as Deemed Export.

Now the question is -

1. As the supplies against ICB is deemed export, whether CENVAT Credit on inputs used can be denied ?

2. Whether the supplies against ICB will be considered as exempt goods for the purpoose of Rule 6 of CCR, 2004 ?

Please advise.

[Rajagopalan Ranganathan]

Sir,

Rule 6 (6) (vii) of Cenvat Credit Rules, 2004 stipulates that "the provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of the said Customs Tariff Act when imported into India and are supplied,-

(a) against International Competitive Bidding;

The above condition can be held satisfied provided excisable goods manufactured in India are similar to goods imported from abroad and are exempted from duties of customs leviable under the first schedule to the Customs Tariff Act and the same are supplied against International Competitive Bidding

Sub-rules (1), (2) and (3) of rule 6 of Cenvat Credit Rules provides various option to the assesse if credit availed inputs and capital goods and credit of service tax paid on input services are utilized in the manufacture of dutiable and exempted excisable goods or used for providing taxable and exempted output services. These provisions are not applicable if you satisfy rule 6 (6) (vii) of Cenvat Credit Rules, 2004.

Therefore answer to your first question is No. The answer to your second question is also No since goods supplied against International Competitive bidding are not exempted excisable goods.

[KASTURI SETHI]

Sh.Arvind Tiwari Ji,

I fully support the views of Sh.Ranganathan, Sir. Also go through Notification No.12/12-CE dated 17.3.12 as amended vide Notification No.12/15-CE dated 1.3.15 (Para C) In the annexure--Condition No.41).

[YAGAY andSUN]

CENVAT credit is allowed on goods removed for ICB as stated above by the Experts

[Ganeshan Kalyani]

Enriching discussion.

AI Summary

Cenvat credit on deemed export: credit maintained for supplies against ICB under Rule 6(6)(vii), not treated as exempted excisable goods. Rule 6(6)(vii) Cenvat Credit Rules, 2004 provides that where excisable goods removed without payment of duty are similar to goods which, if imported, would be exempt from customs duties and are supplied against International Competitive Bidding, sub rules (1)-(4) of Rule 6 do not apply. Consequently, Cenvat credit on inputs and input services used in manufacture of goods supplied against ICB is not to be denied, and such ICB supplies are not treated as exempted excisable goods for the purpose of those adjustment provisions.