Rule 35 of CCR Mandates Reversal Only on Inputs/Capital Goods Cleared as Such, Not on Input Service Credit Like Transportation: CESTAT

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) clarified that Rule 35 of CCR (Credit and Collection of Duty Rules) mandates reversal of Cenvat credit only when inputs or capital goods are cleared as such. Input service credits, such as transportation services, do not trigger reversal requirements. This clarification affects tax compliance practices, compliance risk mitigation in GST and excise duties, and impacts how service credits are modulated during duty reversals or adjustments. The ruling supports clearer procedural tax laws for industries reliant on transportation and input services.