Sub:- Reversal of CENVAT Credit on clearance of goods under rule 19(2) of Central Excise Rules, 2002 under notification 43/2001 – CE (NT) dated 26.6.2001 – reg.

Attention of all the members of the trade and industry is hereby invited to the Notification No.43/2001-CE)NT) dated 26.6.2001, whereunder procurement of excisable goods without payment of duty, for the purpose of use in manufacture or processing of export goods and their exportation out of India, has been provided subject to conditions, safeguards and procedures mentioned therein.  Doubts have arisen over application of sub-rule (1) (2) and (3) of rule 6 of CENVAT Credit Rules, 2002 relating to the clearances made by the supplier under Notification no 43/2001 –CE (NT).

           The matter has been examined by the Board and  as per sub rule (1) of rule  6 of CENVAT Credit Rule, 2002, the credit is not available on inputs which are used in the  manufacture of exempted goods.

           Attention is also invited to clause (ii) of the second proviso to Rule 3(1) of the  Customs and Central Excise Duties Drawback Rules, 1995 which states that no drawback shall be allowed, if the export goods are produced or manufactured using imported materials or excisable materials, in respect of which the duties have not been paid.  Accordingly, the exporter at the time of claiming of drawback, is required to give a declaration that ‘the facility under sub-rule (2) of rule 19 of Central Excise Rules, 2002 has not been or shall not be availed of’ i.e . “no inputs procured without payment of duty have been used in the export goods”.  In other words, the exporter cannot claim Drawback, in case any of the inputs have been obtained without payment of duty, except to the extent and in the manner explicitly permitted under Customs and Central Excise Duties Drawback Rules, 1995.

           All trade associations are requested to give wide publicity to the contents of this Trade Notice, amongst their members/ constituents.

 

Authority: (CBEC Circular No. 781/14/2004-CX    Dated  23.03.204)

                                                                                                      ( RASHEDA HUSSAIN)

                                                                                     COMMISSIONER

Central Excise Delhi - IV