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 Allowed on Inputs for ICB-Deemed Exports; Not Classified as Exempt Under Rule 6(6)(vii) CCR 2004. A query was raised regarding the eligibility of CENVAT Credit on inputs used in manufacturing goods supplied against International Competitive Bidding (ICB), which are deemed exports and exempt from Central Excise Duty. The discussion concluded that, according to Rule 6(6)(vii) of the Cenvat Credit Rules, 2004, CENVAT Credit cannot be denied for such inputs since these goods are not considered exempt for the purposes of Rule 6 of the CCR, 2004. The experts agreed that goods supplied against ICB are not classified as exempt excisable goods, thus allowing the credit.