Cenvat cedit reversal under rule 6 of CCR 2004/trading reversal

[Yatin Bhopi]

Dear all

We are manufacture and also doing trading activity from same premise, below are my queries related to reversal of cenvat credit under rule 6 of  CCR, 2004,.

1. Is we need to reverse this amount before 5^th of succeeding sale, If we opt for  option to pay @ 6% (rule (ii) 6) i.e. sale price -Cost of goods sold or 10% of cost of goods sold whichever is higher.
2. Is this rules applies In case of goods cleared as such (sale)
3. If yes then in case of inter unit transfer (not sale) of raw material what will be situation?
4. What will be interest rate if we not pay this amount in due date (rate mentioned in rule 6 is 24%   
5. If we reverse the proportionate cenvat credit as per below eg. Is it correct?  Total sale = 10,00,000/- (Normal sale + trading sale) Trading sale 1,50,000/- Total input credit 75000/-

Reversal amount will be 150000/1000000X75000 = 11250/-

Please guide

[YAGAY andSUN]

Trading is exempted activity.  In the event of availment of cenvat credit on such activities, there will be a requirement to reverse the proportionate  CENVAT credit or payment of an amount.

Non payment will attract statutory interest and penal actions.

AI Summary

Cenvat credit reversal for trading activities requires proportionate reversal or payment and attracts interest if unpaid. The issue is Cenvat credit reversal under rule 6 of CCR, 2004 where inputs used for trading-an exempted activity-require proportionate reversal or payment under the rule's alternative mechanism. The reversal is calculated by allocating input credit in the ratio of trading sales to total sales; non-payment or delayed payment attracts statutory interest and penal consequences. Questions concern timing of payment, application to goods cleared as such versus inter-unit transfers, computation methodology, and applicable interest.