CENVAT Reversal on trading of goods

[deepak kalambate]

Dear Sir

We are manufacturer exporter and also trading of goods. We are exporting goods from manufacturer's premises i.e. merchant exports as trading activity. Now department is asking us to reverse CENVAT (Common Input Credit) though the goods are exported from manufacturer's premises.

Please advise and give me case laws referances regarding the subject matter.

Thanks & Regards

Deepak Kalambate

AI Summary

Tax Dept Challenges CENVAT Credit Reversal for Exporter; Rule 6(1) Debate on Exempt Services and Export Under Bond A manufacturer-exporter involved in trading goods is questioned by the tax department about reversing CENVAT credit despite exporting directly from the manufacturer's premises. The department argues that trading is an exempt service, thus ineligible for input service tax credit, citing Rule 6 (1) of the Cenvat Credit Rules, 2004. The manufacturer-exporter contends that the goods are exported under the manufacturer's bond, and thus, the reversal should not apply. Respondents in the forum support this view, noting that exported goods are not exempt and the reversal is unnecessary under the Cenvat Credit Rules, especially when goods are exported under bond.