Cenvat credit on Jobwork

[pardeep bisht]

Can a asseesee avail the cenvat credit on the some raw material used by themself for job work of Export Oriented unit . As per rule 6(6) of cenvat Credit rule no need to reverse the credit of clearance to EOU. Please give your opinion with relevant rule , notification and case law at the earliest

[Dilip Darji]

I understand that EOU is sending some material for job work to DTA. During the process of job work at DTA, Job worker is using some material and the question is that whether Job worker is required to reverse CENVAT Credit on the material used by him, during Job work activity. Rule 6 (6) of CENVAT Credit Rule speaks that the clearances to EOU, not to be treated as exempted goods. Meaning thereby that if the goods are supplied by DTA supplier to EOU, it will not be treated as exempyted goods and DTA supplier would be entitled to avail CENVAT Credit, eventhough duty has not been paid towards the goods supplied to EOU. The provisions of Rule 6(6) talks about clearance and the despatches made by DTA job-worker to EOU, is nothing but a removal/return of goods received for the purpose of job-work.Therefore, it is not a clearance and therefore not covered under Rule 6(6) of CENVAT Credit Rules and Job worker is required to revese CENVAT Credit on the material used by him in job work process. Regards. DILIP DARJI.

AI Summary

Clarification on CENVAT credit: Job workers must reverse credit on materials used for EOUs per Rule 6(6) exception. An individual inquired whether an assessee can avail CENVAT credit on raw materials used for job work for an Export Oriented Unit (EOU) without reversing the credit, referencing Rule 6(6) of the CENVAT Credit Rules. The respondent clarified that while Rule 6(6) states that clearances to EOUs are not considered exempted goods, this does not apply to job workers. The job worker must reverse the CENVAT credit on materials used during the job work process, as these are not considered clearances under the rule.