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

Cenvat credit restriction: merchant exporters must reverse input service credit when credits lack a manufacturing nexus for exports.
Traders who perform merchant exports without bringing goods into their premises cannot claim Cenvat credit on input services used for those trading/export activities and must reverse the proportionate credit under the Cenvat Credit Rules; where the manufacturer exports under bond on the trader's behalf, the manufacturer-not the trader-may claim or utilise credit, and exports under bond are treated separately from exempted goods with refund provisions available for unutilised credit on exported final products.