CENVAT CREDIT RULES, 2004

Rule 6(3)

Cenvat credit - Reversal of credit - Assessee was availing Cenvat credit only on proportionate amount of inputs going into manufacture -

Revenue issued show-cause notice alleging that assessee did not maintain separate sets of accounts for dutiable and exempted products and therefore was required to reverse 6% of the value of exempted goods. Assessee contended that it availed Cenvat credit only on inputs used for dutiable goods or exported goods which were exempted based on actual consumption. Therefore, there was no requirement of assessee to reverse any credit under rule 6(3). Held: Assessee was not taking any Cenvat credit at all on invoices at time of receipt of inputs. There was a specific input output co-relation for every batch of every drug known as consumption coefficient according to which quantity of inputs which have gone into the manufacture of that particular batch of the particular drug could be ascertained. Assessee was availing Cenvat credit only on proportionate amount of inputs which were gone into manufacture of either dutiable goods or in manufacture of exempted goods which were exported. Therefore, there was no availment of common input credit. The credit was availed only on such quantity of inputs as gone into the manufacture of dutiable products or exempted products which are exported.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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