LEARNING

OUTCOME
Making aware and enable how
to
Utilize CENVAT Credit on
Exempted Goods & Services

As per Rule 6 (1)

Cenvat Credit not allowed Quantity of
Inputs
Used in manufacture Exempted Goods
Maintain

Separate
Accounts
Accounts

No Separate

No Separate Accounts
Reverse Cenvat Credit
Option 1:
- Pay amount EQUAL TO CENVAT
ATTRIBUTABLE
to input Goods/ Services.
- Manufacture: 5% of Value Exempted
Goods
- Service Provider: 6% of Value
Exempted Output Services
- (w.e.f. 01-04-2012: 6% in both case)

No Separate Accounts
Reverse Cenvat Credit
Option 2:
Proportionate Reversal of Credit
Taken on the Exempted Goods and Services

Numerical 22.2 (Page No. 427):

Which option is best:
-payment of amount
Or
-Reversal of credit

Solution:
Duty Payable: 70,00,000* 14%= 9,80,000
Option 1:
Avail entire credit Rs.10,00,000
Pay 5% - value of exempted goods
i.e. 20,00,000*5%= Rs.1,00,000
TOTAL DUTY PAYABLE: 9,80,000+ 1,00,000= 10,80,000
CENVAT Credit Available:
Rs.10,00,000
____________________________________________
Duty Payable through GAR 7 Challan=
Rs.80,000
_____________________________________________

Solution:
Duty Payable: 70,00,000* 14%= 9,80,000
Option 2:
Avail proportionate credit
=10,00,000*70,00,000/90,00,000
= Rs. 7,77,777.78
TOTAL DUTY PAYABLE:
= 9,80,000- 7,77,777.78 = Rs.2,02,222.22
Duty Payable through GAR 7 Challan=
Rs.2,02,222.22

CENVAT RETURNS
Particulars

Periodicity

Date of Filing

Manufacture of
final product

Monthly

By 10th of next
month

Output Service
Provider

Half-yearly

By the end of the

Month following
the particular
half-year.