Reversal of Cenvat Credit

[Murari Agrawal]

Dear Experts,

We are manufacturing parts of footwear (64062000) & paying duty @6% as per entry S.No.5A of notification no. 5/2006/CE dated 1.3.2006 as amended. The duty on our inputs is 12%. As a result, the Cenvat Credit is not utilised fully and is being accumulated and carried forward. We are not taking SSI exemption and paying duty from day one. Letter opting for notification no. 8/2003 as amended is submitted every year.

During the course of Audit, C.E.Officer has given a spot memo asking ' why excess amount of Cenvat Credit, which is brought forwarded to next year, has not been reversed when you are availing Concessional rate of Duty on the final products'.

I think there is no such requirement in law. I solicit your valued opinion on the issue.

AI Summary

Footwear parts manufacturer disputes need to reverse Cenvat Credit; seeks legal basis for audit team's demand. A manufacturer of footwear parts is facing an issue where the Central Excise Officer questioned the non-reversal of accumulated Cenvat Credit, despite availing a concessional duty rate. The manufacturer argues there is no legal requirement for such a reversal. An expert, responding to the query, advises that there is no need to reverse the Cenvat Credit and suggests asking the audit team to specify the legal provision under which they demand this reversal. The discussion centers on the interpretation of duty structures and compliance with the Central Excise Act.