Cenvat Credit Reversal Rule 6 CCR 2004

[Mahender Lalwani]

Facts :

1) We have Purchases from - Import Purchase , Local Vat / Interstate purchase and Excise purchase,

2) Sales - Local Sales and Excise sales,

3) We have availed Cenvat credit on Input Services received.

4) We have not maintained separate books of accounts for Dutiable and Exempted Goods

Query :

1) Weather local sales would be considered as exempted sales for reversal calculation.

2) Department is asking for reversal of Cenvat credit on Input Services received on proportionate basis of Exempted sales / Total Sales,

3) Weather the other option under Rule 6(3)(i) of CCR 2004 (7%/8%) of Exempted Service if selected can be beneficial.

4) I have read that 10% of trading activity is to be considered as exempt

The Calculation of reversal on proportionate basis is attached for your reference. Kindly guide which would be beneficial

Option	P&L turnover (A)	ER-1 turnover (B)	Exempted (C) (A-B)	ST Credit for the year (D)	'Proportionate 6(3) reversal (E) (D*C/A)
1 - 100% Trading Activity as Exempt	16066364	777014	15289350	14149	13465
2 - 10% Trading Activity as Exempt	16066364	777014	1528935	14149	1346

AI Summary

Clarifying Cenvat Credit Reversal: Local Sales Exemption and 7%/8% Rule Under Rule 6 CCR 2004 Explored A discussion on the reversal of Cenvat credit under Rule 6 of the CCR 2004, initiated by an anonymous party, involves queries about whether local sales are considered exempt for reversal calculations and the applicability of a 7%/8% reversal option. The responses suggest that local sales do not require reversal, the department's approach is practical, and the 7%/8% option may not be beneficial. References to case law, such as Popular Caterers vs. Comm.CGST, are provided to support these views, emphasizing that trading is considered an exempt service under certain conditions. Further clarifications are requested regarding the treatment of trading activities as exempt.