Proportionate credit

[Apurba Biswas]

We are manufacturing excisable goods as well as exempted goods i.e. writing & printing paper and Newsprint respectively .For the purpose of CENVAT credit we have adopted the method of maintaning seperate inventory records for inputs and service which are used for both dutiable and exempted products.We need your guidance for the following Though we maintain seperate inventory records for input material as it is convenient and easy , Can we follow Rule 6 provision of propotionate credit for common services which will differ with input material.Please guide

[Surender Gupta]

I think the combination of the two may be allowed. You may keep separate records for inputs (inventory) and avail cenvat credit on inputs used in dutiable goods. However, since the nature of Input services, may not allow you to keep separate records, you may apply the formula given in Rule 6(3A) to proportionate the Input service tax credit and avail the credit accordingly.

AI Summary

Proportionate CENVAT credit allowed by keeping separate input records and apportioning input service credit under Rule 6(3A). Where a manufacturer produces both dutiable and exempted goods, maintain separate inventory records for inputs used in dutiable goods to avail full credit, and apply the formula in Rule 6(3A) to proportionate and avail input service tax credit for common services that cannot be segregated.