applicability of Rule 6 of CCR, 2004

[felix ka]

Happy Diwali to all!

We are about to manufacture a dutiable product; 40 % of which is to be removed under the exemption notification 64/95-CE, dated 16-3-95 (exemption to goods supplied for defence and other specified purposes). Please tell me whether 

(1)rule 6 is applicable to us since we are manufacturing no exempted goods

(2)we have to proportionately reverse the cenvat credit of the inputs and input services as per Rule 6 (3A) of CCR, 2004 and

(3) how you had decided the most advantageous option in an occasion where proportionate reversal of cenvat credit was required to be made.

thanks and regards

K A Felix

AI Summary

Rule six cenvat reversal applies where exempt and dutiable production coexist; options include proportional reversal, separate accounts, or flat payment.
Rule 6 of the Cenvat Credit Rules, 2004 applies where both dutiable and exempt goods are manufactured under notification 64/95. Taxpayers must either maintain separate accounts, reverse common cenvat credit using the proportionate formula in Rule 6(3A), or pay a prescribed flat-rate charge on exempt removals to retain full credit. Credits for inputs and input services exclusively used for dutiable output are fully available; those exclusively used for exempt output are not available. Selection among options requires computing the proportion of input duty attributable to exempt production and comparing costs and compliance burdens.