Excise Reverse or not

[CHINTAN SHAH]

Dear Sir,

We have supplied goods in Mega Power Project at Sagardighi, west Bengal. Also we have not created separate books of account. We will take CENVAT credit against material procured for this project. Now Excise department is asking to take 5% reverse on total basic sale value.

As this is mega power project, are we liable tp pay 5% reverse ? Please guide us.

[DR.MARIAPPAN GOVINDARAJAN]

The CENVAT Credit Rules requires to maintain separate books of account for exempted goods as well as dutiable goods and also for exempted services as well as taxable services. If you are supplying both exempted goods and dutiable goods you are having an option. If you are not maintaining separate books of account you have to pay the percentage of tax as mentioned in your query.

[Ganeshan Kalyani]

I agree with Sri Mariappan Sir.

[KASTURI SETHI]

I support the views of Sh.Maiappan Govindarajan, Sir

AI Summary

CENVAT Credit Rules: failure to maintain separate books can trigger reverse charge liability on supplies to projects. The CENVAT Credit Rules require maintaining separate books of account to segregate exempted goods/services from dutiable goods/services; if a taxpayer supplies both and does not maintain separate books, the taxpayer must pay the prescribed percentage under the reverse charge or specified percentage mechanism, which prevents allocation of CENVAT credit and affects tax liability on project supplies.