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Rule 6 of CENVAT credit Rules

Cenvat Credit - By: - dipsang vadhel - Dated:- 2-2-2016 Last Replied Date:- 3-2-2016 - CENVAT Credit of eligible Taxes on inputs, capital goods and input services that goes into or in relation to manufacture of dutiable goods or taxable services is admissible. Similarly, CENVAT Credit of eligible Taxes on inputs, capital goods and input services that goes into or in relation to manufacture of exempted goods or for provision of exempted service. Though this position is very clear and seems to be .....

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CCR, which deals with the situation in case where one is manufacturing both dutiable and exempted goods and/or providing taxable and exempted services, has proven to be headache for assesse. In additions to complexity in calculations involved in the matter, some of the interpretation issues in opinion of the author are as under: Sr.no. Conditions CENVAT Admissibility Issues 1 whether maintaining separate account for receipt or consumption of input service and input goods (refer to Rule 6(2) of .....

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ds. Further, this assumes that it is always possible to bifurcate and more particular document inputs and input services used for taxable and exempted activities. In practice, this will not be the case, more particularly in case of input services. 2 When separate account for receipt or consumption of input service and input goods is not maintained. 2.1 Whether paying an amount equal to 6% of the value of exempted goods/services (refer Rule 6 (3) (i) of CCR,2004) Avail full credit of eligible Tax .....

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mpted). 2.2 Whether paying an amount equal to CENVAT credit attributable to inputs and input services used in or in relation manufacture of exempted goods/services (refer Rule 6 (3) (ii) of CCR,2004) Avail full credit at first Cenvat and pay back amount calculated using following formula: Credit taken * Value of Exempted Service or Goods manufactured or removed during the preceding financial year Formula uses the word 'total Cenvat Credit taken and not 'common credit', therefore the .....

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e exempted). 2.3 whether maintaining separate account for receipt or consumption of inputs and paying an amount equal to CENVAT credit attributable to input services used in or in relation manufacture of exempted goods/services The assesse should work out as what is separate account for receipt or consumption of input service and inputs. Further, this assumes that it is always possible to bifurcate and more particular document inputs used for taxable and exempted activities. Here also it is not .....

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drafting of CCR has led to lot of litigation around rule 6 of CCR thereby depriving manufacturers and service providers from intended benefit. To ensure that rule 6 of CCR meets the objective, it is desired that CENVAT Credit of eligible Taxes on inputs, capital goods and input services that goes into or in relation to manufacture of dutiable goods or taxable services is allowed to the extent it is possible to maintain separate account for receipt or consumption of input service and input goods .....

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