Cenvat credit on exempted product cleared in domestic market

[pardeep bisht]

we are manufacturer of exciseable product as well as exempted product . Our exempted product maximum cleared for export,a very low quantity we cleared in domestic market,on the clearance in DTA we pay 5% amount as per rule 6(3)i . and avail the Cenvat credit for all the Inputs and services. Please clear we are doing write thing

[Surender Gupta]

For the purpose of rule 6 or 6(3) of the cenvat credit rules, 2004, export is not treated as exempted goods. You need to reverse the cenvat credit in respect of exempted goods cleared for domestic purpose. Further, with regard to export, in case you have accumulated credit of cenvat credit which can not be utilized due to export, you can claim refund under rule 5 of the CCR, 2004.

[Ramanujam Varadarajan]

Rule 6(6)((v) of Cenvat Credit Rules, 2004 is specific that provision of reversal of Cenvat credit or payment of 5% would not arise if the excisable goods are cleared for export under bond. On the removal of exempted goods to DTA, reversal of proportionate Cenvat credit or 5% payment would be applicable

[Anish Jain]

I agree with both replies. you need not to reverse entire credit only proportionte credit on dta sale is required to be reveresed and balance credit can be refunded under rule 5 of CCR, 2004

AI Summary

Manufacturer Queries Cenvat Credit on Exports; Rule 5 Allows Refund, Rule 6(3)(i) Requires Reversal for Domestic Sales. A manufacturer of both excisable and exempted products, primarily exporting exempted goods, inquired about the correctness of their Cenvat credit practices. They pay a 5% amount on domestic clearances under rule 6(3)(i) and avail Cenvat credit for inputs and services. Respondents clarified that exports are not treated as exempted goods, and Cenvat credit must be reversed for exempted goods sold domestically. However, accumulated credit due to exports can be refunded under rule 5 of the Cenvat Credit Rules, 2004. Proportionate credit reversal is required for domestic sales, with the balance eligible for refund.