CAG's Objections on CENVAT Credit

In case the provision is made (as proposed by CAG) that Cenvat credit availed towards input services should also be reversed while removing inputs / capital goods as such, it is apparent that the same would lead to increased record keeping and compliance cost for assesses as well as for the department. For example, in a case where a manufacturer receives one consignment containing two or more inputs having different quantities and values and avails Cenvat credit of input services for procurement / transportation of this consignment, it would be cumbersome to calculate the proportionate Cenvat credit towards input services, at the time of removal of only one of such inputs. A question may arise whether proportionate Cenvat Credit of input service has to be calculated on the basis of quantity of different inputs or on the basis of value of different inputs. Similar further issues may arise in respect of indirect services (e.g. Security Service) availed by the assessee. It will only lead to more litigations.

Rameshchandra Kabra 29/07/2016