Whether Rule 6 of CENVAT credit rules applies where CENVAT not availed?

[Yatin Bhopi]

Dear experts,

We are manufacturer. we have sold old scrap equipment in 2016-17 which was purchase prior to 1994 (prior to CENVAT scheme). We have not paid excise duty since no CENVAT credit availed on said capital goods.

Our EA2000 audit is going on and auditor has argued that these clearance is nothing but exempted goods and Rule 6 of CCR 2004 will applicable and we have to pay 7% since we may have used various services to clear these goods (like security service, maintenance service, telephone service, online auction service, etc).

Please let me know legality in this case

[YAGAY andSUN]

In our view, Rule 6 of the CCR is not applicable on such transactions as payment of excise duty on transaction value of the such goods would be sufficient.

[Yatin Bhopi]

Sir

We have not paid excise duty since no CENVAT credit had been availed. all goods were procured prior to CENVAT scheme

[YAGAY andSUN]

Then in our view Rule 6 of CCR is not applicable.

[Yatin Bhopi]

Thanks Sir

[DR.MARIAPPAN GOVINDARAJAN]

Definitely will not be applicable.

[Yatin Bhopi]

Thanks a lot sir, now query has been closed by EA2000 auditors

AI Summary

Applicability of Rule 6 of CENVAT credit rules: not triggered where no CENVAT credit was availed; transaction value governs levy. Where capital goods bought before the CENVAT scheme are cleared and no CENVAT credit was availed, Rule 6 of the CENVAT Credit Rules is not applicable; liability should be assessed on the transaction value of the goods rather than by applying Rule 6's presumptive service allocation, and auditors should not invoke Rule 6 retrospectively in such circumstances.