CENVAT Obligation of manufacturer of dutiable and exempted goods

CENVAT Obligation of manufacturer of dutiable and exempted goods-

1)     CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2)

2)     Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be used as fuel, and manufacturers such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final goods and the quantity of inputs meant for use in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. The manufacturer, opting not to maintain separate accounts shall follow either of the following conditions, as applicable to him, namely:-

a) If the exempted goods are,-

i)  Final products falling under Chapters 50 to 63 of the Schedule to the Central Excise Tariff Act, 1985;

ii)  Tyres of a kind used on animal drawn vehicles of handcarts and their tubes, falling within Chapter 40;

iii)  Black and white television sets, falling within Chapter 85.

iv)  Newsprint, in rolls or sheets, falling within Chapter heading No. 48.01, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to inputs used in or in relation to the manufacture of such final products at the time of their clearance form the factory, or

b) If the exempted goods are other than those described in clause (a) above, the manufacture shall pay an amount equal to eight per cent, of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory.

3)     No credit of the specified duty shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods.

4)     The provisions of sub-rule (1), sub-rule(2) and sub-rule(3) shall not be applicable in case the exempted goods are either,-

(i) Cleared to a unit in a free trade zone; or

(ii) Cleared to a hundred per cent. Export-oriented undertaking; or

(iii) Cleared to a unit in an ElectronicHardwareTechnologyPark or SoftwareTechnologyParks; or

(iv) Supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance No. 108/95-Central Excises, dated 28^th August 1995; or

(v) Cleared for export under bond in terms of the provisions of rule 13.