Presently, the Trading activity has been included in the definition of exempted service. However, Rule 6(3) D regarding reversal of CENVAT credit for exempted product/services in the case of trading is still continued. Sometimes, we are clearing the goods i.e. Input/ Capital Goods as such from our factory & reverse the proportionate CENVAT credit.
Kindly let us know whether above transactions will also be treated as trading activity and we have to reverse proportionate CENVAT credit on Input service i.e. on GTA ? The Excise Auditors in some of the industries are taking objection for reversal of credit on Input services, treating Input /Capital goods as such as trading activity.
Regards,
VINAY
Clarifying CENVAT Credit Reversal: When Goods are Cleared as Such and Trading Activities Dominate, Rule 6 Considerations Apply. A discussion on the reversal of CENVAT credit for input services in cases where goods are cleared as such, potentially classifying them as trading activities. The query highlights concerns about whether these transactions require reversing CENVAT credit on input services like GTA. Responses indicate that if goods intended for manufacturing are removed as such, it doesn't classify as trading. However, if trading activities dominate, appropriate credit reversal is necessary. Additionally, if trading value is unclear, a notional profit method is suggested to calculate the proportionate CENVAT credit to be reversed. (AI Summary)
TaxTMI 
TaxTMI 
TaxTMI 
