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

Reversal of cenvat credit required for exempted goods sold domestically; export sales under bond avoid reversal, refund available.
Clearance of exempted excisable goods to the domestic market requires proportionate reversal of Cenvat credit or payment for the DTA sale. Exports under bond are not treated as exempted clearances and do not attract reversal; accumulated credit unutilized due to export may be claimed as a refund under the applicable refund provision.