CENVAT Credit Rules, 2004

(1)

(2)

Topics

 Definitions (Rule-2)

 CENVAT Credit(Rule-3)

 Conditions for availing CENVAT Credit(Rule-4)

 Refund of CENVAT Credit(Rule-5 & 5A)

 Obligations of manufacturer of dutiable and exempted goods(Rule-6)

 Storage of input outside the factory(Rule-8)

 Documents and accounts(Rule-9)

 Information relating to principal input(Rule-9A)

 Procedures and facilities for LTU(Rule-12A)

 Recovery of CENVAT credit wrongly taken(Rule-14)

 Confiscation and Penalty (Rule-15)

 General Penalty(Rule-15A)

(3)

Definitions(Rule-2)

 Rule 2(k) Input

 Rule 2(l) Input Service

 Rule 2(a) Capital Goods

(4)

Definitions(Rule-2) Rule-2(k) input

 All goods

 except LDO, HSDO and petrol

 used

 in or in relation to

 the manufacture of final product

 whether directly or indirectly

 and whether contained in the final product or not

 and includes

 lubricating oils, greases, cutting oils, coolants

 accessories of final products cleared alongwith final product

 goods used as paints

 goods used as packing material

 goods used as fuel

 goods used for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within factory of production

Contd.

(5)

 All goods

 except LDO, HSDO, petrol and motor vehicles

 used for providing output service

 Explanation 1

 The LDO, HSDO and petrol shall not be treated as an input for any purpose whatsoever

 Explanation 2

 Inputs includes goods used in manufacture of capital goods, which are further used in the factory of the manufacturer but shall not include cement, angles, channels, CTD, TMT and other items for construction of factory shed, building or laying of foundation or making structure for support of capital goods.

Contd.

(6)

 Inputs specifically eligible

 Lubricating oils, greases, cutting oils, coolants (Earlier these were covered in CG)

 Accessories of final product provided they are cleared along with final product

 Paints: Thinners eligible, Painting for machinery and pipelines eligible

 Packing Material

 Fuel: anything which is burnt and used as source of heat and power is fuel. E.g. furnace oil, However no credit on LDO, HSDO and petrol

 Goods used for generation of electricity or steam for manufacture of final products or any other purpose

Contd.

(7)

 SC in case of MSIL vs CCE

 All the three parts of definition, namely specific, inclusive and place of use to be satisfied before an input become eligible input

 Mere fact that items a packing material whose value included in assessable value of final product not

entitle manufacture to take credit

Contd.

(8)

 Inputs used for QA purposes

 If the test is an integral part of the

manufacture, then credit should be allowed

 Essential and mandatory pre-requisite for marketability of the product

 Covered under incidental or ancillary processes mentioned in definition of manufacture

Contd.

(9)

 Inputs Destroyed before use/pilfered from store room

 Must be USED

 Have to reverse credit if already taken

Contd.

(10)

 Shortage of input

 If shortage/loss is due to natural causes like evaporation during transit/storage or loss due to handling then CENVAT available even in respect of lost quantity

 If any other reason then CENVAT reversal

Contd.

(11)

 Input becomes waste and is sold as scrap

 CENVAT allowed even if input become

waste during manufacturing process and sold as scrap even if such waste is

exempted or chargeable with nil rate of duty

 Same rule applicable if input is contained in waste/refuse/by-product

Contd.

(12)

 Final product cleared in durable and returnable packing

 CENVAT allowed as definition includes packing material

Contd.

(13)

 Inputs used as consumables

 Inputs used for marking on packing

 Inputs used for cleaning machinery

 Grinding media - steel balls - inputs or capital goods?

 Filter cloth or media

 Thermic fluid used for heating reactor

Contd.

(14)

 Are goods used in ETP eligible for credit as ‘inputs’?

 The Hon’ble Supreme Court has held that effluent treatment is integral to

manufacture

 Indian Farmer Fertiliser Co. Vs CCE - 1996(86)ELT 177(SC)

 Followed by Madras High Court

 Siv Ind Ltd Vs CCE 2001(43)RLT523(Mad)

 Contra - earlier decision in Mettur

Chemicals ^Contd.

(15)

 Explanation 2

 inputs includes goods used for manufacture of capital goods which are used in a factory

 Steel sheets, any items or machinery used in the manufacture of capital goods inside a factory to be treated as ‘inputs’

(16)

 Questions??

 RM damage during storage in RMG due to rain

 Batch become NCIP due to wrong addition of material

 LPG for generation of steam in boiler

 Steel plates and strips used in manufacture of storage tank for liquid material

 Steel plates and strips used for

construction of bridge between RH and SBU

(17)

Rule-2(l) input service

Any service

 used by provider of taxable service for providing an output service

 used by manufacturer

 whether directly or indirectly

 in or in relation to

 the manufacture of final products

 and clearance of final products

 upto the place of removal

Contd.

(18)

and includes

 Service used in relation to repair etc of factory or premises of output service provider or office related thereto,

 Advertisement, sales promotion,

 storage upto place of removal,

 procurement of inputs,

 Activities relating to business,

 inward transportation

 outward transportation upto the place of

removal _Contd.

(19)

As per section 4(3)(c) of CE Act,

 Place of Removal means

 a factory or any other place

 a warehouse or any other place wherein excisable goods have been permitted to be deposited without payment of duty

 a depot, premises of a consignment agent or any

other place from where the excisable goods are to be sold after their clearance

from where such goods are removed.

Contd.

(20)

 CENVAT credit of service tax paid on outward freight

 Credit allowed upto the place of removal

 All dispatches to depot/RDC – Credit allowed

 Export - ?????

 Other Plant Dispatches - ?????

 Sample Dispatches - ?????

Contd.

(21)

 CENVAT credit of service tax paid on Mobile Phones

 Credit allowed

 provided used for providing output service or in or in relation to manufacture of FG

Contd.

(22)

 Payment of Service Tax on GTA through using CENVAT credit ????

 payment of service tax on GTA CANNOT be made through using CENVAT credit.

 as consignor/consignee is neither output service provider nor such service is output service for them

 Payment by Cash and then take credit

(23)

 Questions

 Service tax paid on legal services by HO

 Service tax paid on TV commercials by HO

 Service tax paid on TV commercials by plant

 Service tax paid on repair of RDC

 Service tax paid on canteen services

 Service tax paid on outward freight for despatch to depot

(24)

Rule-2(a) capital goods

(A) The following goods namely,

 all goods of First Schedule to the Tariff Act falling under:

 Chapter-82(tools, implements, spoons and forks of base metal and parts thereof of base metal)

 Chapter-84(machinery and mechanical appliances and their parts)

 Chapter-85(electrical and electronic machinery and equipment)

 Chapter-90(optical, photographic and surgical equipments)

 Heading-6805(natural or artificial abrasive powder on a base of textile material)

 Heading-6804(grinding wheels and the like)

 pollution control equipments

 components, spares and accessories of goods specified in above two points

 moulds and dies, jigs and fixtures

 refractories and refractory materials

 tubes and pipes and fittings thereof

 storage tank used

 in the factory but does not include any equipment or appliances used in an office

 for providing output service Contd.

(25)

(B) Motor vehicles registered in the name of provider of output service for providing following taxable services:

 courier

 tour operator

 rent-a-cab operator

 pandal/shamiana

 cargo handling

 goods transport

 outdoor caterer

Contd.

(26)

 What is meant by ‘factory’ ?

 Will items used in a canteen within a factory become eligible for credit ? Say dish washing machines (CSH 8422.10) in canteen?

 Items used for the comfort of workmen on the shop-floor eligible? Say fans used on the packing line for workmen?

 Can an air-conditioner used inside a canteen

located within the factory premises be eligible for credit?

 Are capital goods used in R&D but within a registered factory premises eligible for credit?

Contd.

(27)

 Used in factory...

 In order to qualify as capital goods, the

goods need not be used for producing the FG or used in the process of any goods for manufacture of FG or used for bringing

about any change in any substance for

manufacture of FG. The only requirement is that the said foods should be used in the

factory of the manufacturer of FG.

CCEx v. Jawahar Mills Ltd.[2001] 132 ELT 3 (SC)

Contd.

(28)

 Does not include any equipment or appliances used in an office

 What is ‘office’?

 What if the AC is installed in an office cabin in the manufacturing area – it is used to

cool the manufacturing area and also the cabin?

Contd.

(29)

 Is duty payable on capital goods produced and used captively?

 Exemption for capital goods produced and used captively under notifn. 67/95

 Does this exemption cover all goods?

(30)

 Questions

 Equipment used in R&D centre within plant

 Plastic crates used for keeping sample bottles

 Welding electrodes used for repair

 Computers

 Air conditioners

(31)

CENVAT Credit(Rule-3)

Rule-3(1) duties on which CENVAT is allowed

CENVAT credit of following duties/taxes paid on any input/capital goods received in factory or input service received by the

manufacturer/provider of output service shall be allowed:

 BED

 SED

 Additional duty of Excise (under ADE(TTA))

 Additional duty of Excise (under ADE(GSI))

 National Calamity Contingent Duty

 E Cess on excisable goods

 SHE Cess on excisable goods

 Additional Duty of Customs

 Additional Duty u/s.3(5) of Customs Tariff Act

 Additional Duty of Excise (ADET)

 Service Tax

 E Cess on taxable services

 SHE Cess on taxable services

 Additional Duty of excise u/s.85 of the Finance Act, 2005 Contd.

(32)

Rule-3(1) duties on which CENVAT is allowed

 Credit on Duty PAID

 Even if the supplier of inputs has paid duty in excess of that payable thereon, the

assessee is eligible to avail CENVAT credit of the TOTAL sum.

 The credit cannot be denied in the hands of the assessee without, in the first instance, disturbing the assessment of the supplier of inputs.

Contd.

(33)

Rule-3(2) FG becomes excisable after receipt of input

 CENVAT credit shall be allowed of the duty paid on inputs

 lying in stock

 in process

 inputs contained in FG lying in stock

 on the date on which any goods

manufactured by the said manufacturer

 cease to be exempted

 any goods becomes excisable

Contd.

(34)

 What of CENVAT credit of Capital Goods in such case ????

 Eligibility of CENVAT credit on CG should be determined at the time when CG are received by manufacturer.

 Subsequent becoming of goods as dutiable or the manufacturer putting CG to other use

could not revive the question of admissibility of CENVAT credit.

 Held in Surya Roshni Ltd. v. CCEx[2003] ELT A273 (SC)

Contd.

(35)

 What if input/CG

 used for manufacture of

 exempted intermediate goods ,

 which in turn used to manufacture

 FG which is dutiable?

 Credit can be availed

 CCEx. v. Hindustan Sanitary Ware [2002] 145 ELT 3 (SC)

Contd.

(36)

 What if input originally entitled to CENVAT subsequently became ineligible for

CENVAT?

 CENVAT credit lawfully earned could be utilized even after withdrawal of CENVAT for that input

 Dhar Cement Ltd. v. CCEx. [1996] (Tri.)

Contd.

(37)

Rule-3 CENVAT credit if input price reduced after clearance

 APL purchased pigments (Assessable Value=10 Lakhs, Excise

Duty=10%, No EC or SEHC) from Ciba Ltd and took the CENVAT credit admissible under the law. Thereafter, APL paid a lumpsum of Rs.10.5 Lakhs only to Ciba Ltd in full and final settlement of the said purchase.

 State-

 What is amount of duty payable at the time of clearance of the goods?

 1 Lakh ( 10 Lakh x 10% )

 Whether Ciba Ltd can file refund claim for the excess duty, if any, paid by it?

 No, AV u/s.4 or 4A is 10 Lakhs so duty is 1 Lakh

 Whether APL is required to reverse any amount of CENVAT credit taken by it?

 No

 What would be answer, if assessable value of Rs.10 Lakhs had been provisionally assessed and subsequently, the value inclusive of duty is fixed at 10.5 Lakhs, as paid by APL. Ignore Interest.

 Final Liability Rs.95455, Refund = 4545

 What if refund not granted?

 Take Credit of 1 Lakh

(38)

Rule-3(3) service becomes taxable after receipt of input

 CENVAT credit shall be allowed of the duty paid on inputs

 lying in stock

 on the date on which any service provided by output service provider

 ceases to be exempted

 service becomes taxable

Contd.

(39)

Rule-3(4) utilization of CENVAT credit

 CENVAT credit may be utilized for payment of

 any duty of excise on any FG

 an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed

 an amount equal to CENVAT credit taken on CGs if such CGs are removed as such

 an amount u/r.16(2) of CE Rules,2002(FG Sales Return subsequent payment of duty)

 service tax on any output service

Contd.

(40)

 Can CENVAT credit be used for payment of interest, penalty and fine ????

Contd.

(41)

 Restriction on utilization in certain cases

 credit available upto last day of month can be utilized for payment of duty for that month

 Payment of NCCD, Additional duty of excise u/s.85 cannot be made by CENVAT credit on other than NCCD and AED

Contd.

(42)

Rule-3(5) input and CG removed as such

 When input or CG are removed as such from factory

 manufacturer shall PAY an amount equal to CENVAT credit availed on such input or CG and such removal is made under the cover of invoice

 if CG are removed after being used pay an amount equal to CENVAT credit availed on such CG as reduced by 2.5% for each

quarter of a year from date of taking CENVAT credit

Contd.

(43)

Rule-3(5) input and CG removed as such

 APL purchased pigments valued

Rs.110000(inclusive of excise duty @ 10%) for manufacture of paint. It

availed CENVAT credit of Rs.10000. APL subsequently cleared the said inputs as such from factory in following manner

 Sales to APPG (Purchase Price 20000) 40000

 Sales to Local Paint Manufacturer (Purchase Price 10000) 10000

 Transfer to APL-ANK Plant (Purchase Price 70000) NIL

 How much CENVAT credit to reverse in each case ?

 [ 20000 x ( 10000 / 100000 ) ] = 2000

 [ 10000 x ( 10000 / 100000 ) ] = 1000

 [ 70000 x ( 10000 / 100000 ) ] = 7000

Contd.

(44)

Rule-3(5A) CG cleared as waste/scrap

 When CG is cleared as waste/scrap

 manufacturer shall PAY an amount equal to duty leviable on transaction value

 cleared on the cover of invoice

Contd.

(45)

Rule-3(5B) input or CG written of

 When ‘input’ or ‘CG before being put to use’ on which CENVAT credit is taken

 is written off fully

 provision to write off is made in books of accounts

 manufacturer shall PAY an amount

equal to CENVAT credit taken thereon

 However if later on such provision is reversed then take credit

Contd.

(46)

Rule-3(5C) Reversal in case of remission of duty u/r.21 of CE Rules,2002

 When payment of duty on FG is ordered to be remitted u/r.21 of CE Rules,2002 then manufacturer has to REVERSE

CENVAT credit taken on inputs used in manufacture of such FG

Contd.

(47)

Rule-3(6) Credit on payment u/r.3(5 & 5A)

 The amount PAID under sub-rule 5 and 5A of rule 3, shall be eligible as CENVAT credit as if it was duty paid by the

person who removed such goods u/r.3(5 & 5A)

Contd.

(48)

Rule-3(7) restriction in utilization of CENVAT credit on EC and SHEC

 CENVAT credit on EC can be utilized for payment of EC only, however credit of EC on excisable goods can be used for payment of EC on taxable services and vice versa

 CENVAT credit on SHEC can be utilized for payment of SHEC only, however

credit of SHEC on excisable goods can be used for payment of SHEC on

taxable services and vice versa

Contd.

(49)

Rule-3(7) CENVAT credit w.r.t. inputs manufactured by 100% EOU/EHTP/STP and used in DTA

 CENVAT credit admissible is

 AV x [{1+(BCD/200)} x (CVD/100)]

 AV = Assessable Value

 BCD = Basic Customs Duty Rate

 CVD = Additional duty of Customs Rate

 E.g. AV=100000, BCD=10%, CVD=8%, EC=1%, SHEC = 2%

 CENVAT credit = 100000 x [{1+(10/200)} x (8.24/100)]

 = 8652

Contd.

(50)

Conditions for allowing CENVAT Credit(Rule-4)

Rule-4(1 & 2 ) when to take CENVAT credit

 CENVAT credit in respect of input is taken

IMMEDIATELY ON RECEIPT of input in the factory Immediately does not mean within 24 hrs,

credit can be taken at any time to subsequent to receipt

 CENVAT credit in respect of CG received during FY is taken as follows:

 not exceeding 50% of duty paid on such CG in same FY

 balance credit may be taken in any FY subsequent to the FY in which CG were received

 provided such CG are in possession of manufacturer

 However ADC can be availed 100% on receipt of

capital goods _Contd.

(51)

Rule-4(1 & 2 ) when to take CENVAT credit

 APL manufactures paints which were

considered by them to be exempted from payment of duty. After 2 years of their

commencing operations, Excise officer made a case against them holding that the products manufactured by them are chargeable to duty.

APL agreed to pay duty however APL also want to claim benefit of CENVAT credit of duty paid on inputs.

 Whether APL’s claim tenable?

 Pasumai Irrigation Ltd. v. CCEx. [1999] (Tri.)

Contd.

(52)

Rule-4(3) Legal ownership of CG

 APL purchased CG worth Rs.1.1 Crore(inclusive of Excise duty @ 10%). However APL borrowed Rs.0.55 Crore from HDFC Bank as loan to pay to vendor. Excise officer wants to allow only half (Rs.0.05 Crore. Rs.0.025 in first year and

balance in subsequent year)

 Whether excise officer’s claim tenable? Why?

Contd.

(53)

Rule-4(4) disallowance of credit on which depreciation is claimed u/s.32 of IT Act

 CENVAT credit will be disallowed to the extent depreciation is claimed u/s.32 of IT Act on

excise portion of cost of asset

Contd.

(54)

Rule-4(5) input/CG sent for jobwork

 Inputs and CG on which credit is taken can be sent for further processing, test, repair

without payment of duty based on a challan

 The goods should be received into the factory on completion of job work within 180 days

 If not received within 180 days , the CENVAT should be reversed and on receipt of the

material again credit can be taken.

 CENVAT credit shall be allowed on jigs, fixtures, moulds and dies sent by manufacturer to a job

worker ^Contd.

(55)

Rule-4(7) credit on service tax on actual payment basis

 CENVAT credit in respect of input service shall be allowed; on or after the day on which

payment is made of the value of input service and the service tax paid or payable as is

indicated in invoice, bill or challan referred to in Rule-9

(56)

Refund of CENVAT credit(Rule-5)

Rule-5 Refund of CENVAT credit

 When any input or input service is used in

 manufacture of

 finished product

 which is cleared for export under bond or LUT

 intermediate product

 which is cleared for export

 providing output service

 which is exported

 CENVAT credit in respect of input or input service shall be allowed to be utilized towards payment of

 duty of excise on FG

 service tax on output service

 if such adjustment is not possible, the manufacturer shall be allowed the REFUND of such CENVAT credit

(57)

Obligation of manufacturer of dutiable and excisable goods(Rule-6)

Rule-6(1) inputs used in manufacture of exempted goods

 What if inputs are used only in exempted goods ?

 Credit is prohibited if inputs are used exclusively in exempted goods

Contd.

(58)

Obligation of manufacturer of dutiable and excisable goods(Rule-6)

Rule-6(2) inputs used in manufacture of exempted goods as well as goods chargeable to duty

 Separate accounts to be maintained for inputs used in exempted and dutiable goods

 Credit admissible only on quantity used in dutiable products

 What if manufacturer do not want to maintain two separate accounts?

Contd.

(59)

Rule-6(3 & 3A) inputs used in manufacture of exempted goods as well as goods chargeable to duty (separate accounts not maintained)

 two options

 pay 5% of the value of the exempted goods

 value(u/s.4/4A) is excluding sales tax and other taxes

 whether discount is admissible?

 is CENVAT credit admissible of the 5% amount paid by the supplier?

 pay an amount equal to the CENVAT credit

attributable to the inputs used in or in relation to manufacture of exempted goods

 amount is calculated u/r.6(3A)

Contd.

(60)

Rule-6(2, 3 & 3A) Example

 Total value of exempted goods cleared from factory = 150 Lakhs

 Assessable Value of dutiable goods = 200 Lakhs(BED=8%)

 CENVAT credit on input ‘X’ which was exclusively used for manufacturing exempted goods = 20 Lakhs

 CENVAT credit on input ‘Y’ which was exclusively used for manufacturing dutiable goods = 10Lakhs

 CENVAT credit on input ‘Z’ which was used for manufacturing exempted goods as well as dutiable goods (no separate books of account maintained) = 10 Lakhs

 Compute duty liability provided assessee opted for option I i.e. to pay 5% of value of exempted goods?

 Rs. 3.5 Lakhs

 Compute duty liability provided assessee opted for option II i.e. to pay proportionate duty of value of exempted goods ?

 Rs. 0.3 Lakhs _Contd.

(61)

Rule-6(2, 3 & 3A) inputs used in manufacture of exempted goods as well as goods chargeable to duty (separate accounts not maintained)

 How the debit can be made?

 By debiting CENVAT or otherwise (PLA)

Contd.

(62)

Rule-6(4) CG used in manufacture of exempted goods

 No credit admissible

 If CG used for exempted and dutiable goods

Procedures CENVAT credit admissible

Contd.

(63)

Rule-6(5) exception for certain input services

 No separate accounts for following input services used for manufacture of dutiable as well as exempted goods

 (a) architect (b) consulting engineer (c) foreign exchange broker (d) management consultant (e) security agency (f) interior

decorator (g) maintenance or repair (h) construction (i) banking &

other financial services (j) technical testing/analysis (k) scientific /technical consultancy (l) intellectual property service (m) technical inspection and service (n) erection, commissioning or installation (o) insurance auxiliary services relating to life insurance

 Full credit is allowed

Contd.

(64)

Rule-6(6) subrules 1 to 4 not applicable if goods removed w/o payment of duty to SEZ etc

 Rule-6(1), 6(2), 6(3) and 6(4) not applicable if excisable goods are removed without payment of duty to

 SEZ

 100% EOU

 EHTP/STP

 United Nations

 exported under bond

 supplied against international bidding

 gold/silver arising in course of manufacture of copper/zinc

Contd.

(65)

case study

 APL was engaged in manufacture of paints(BED=8%), water based paints(BED=16%) and Eco

distemper(BED=0%). Eco distemper was entirely

exported by APL under bond without payment of duty.

APL claimed refund of CENVAT credit attributable to

inputs used in manufacture of Eco distemper exported by it.

 Excise officer contended that since Eco distemper was already exempt from excise duty, APL could not export it under bond. Moreover, as APL did not maintain separate accounts for dutiable and exempted goods ordered them to pay 5% of value of Eco distemper.

 Whether department’s view correct?

 Repro India Ltd. v. UOI [2009] (Bom.)

Contd.

(66)

CENVAT Reversals in certain cases

 When inputs are used for other than manufacture of final products say pure R&D not connected with

manufacture

 When reprocessing or repairs are done not amounting to ‘manufacture’

 When exempted goods are say supplied to a foreign embassy under exemption

 Internal consumption within the factory of inputs other than in manufacture of exempted capital goods

(67)

Storage of input outside factory(Rule-8)

 DC/AC, as the case may be, by an order permit storage of input o/s. factory

 order to be given having regard to the nature of goods and shortage of storage space

 DC/AC may specify limitations/conditions

(68)

Documents and accounts(Rule-9)

 Credit only on the following documents :

 Excise invoice

 Bill of Entry

 Excise Invoice of registered first stage dealer

 Excise Invoice of second stage dealer

 Excise Invoice issued by an importer from his godown or Registered Consignment Agent

 Challan for payment of differential CVD

Contd.

(69)

 Credit only on the following documents :

 Excise Invoice of registered first stage dealer of imported goods

 Excise Invoice of second stage dealer of imported goods

 Invoice issued by a manufacturer for inputs or capital goods

 Supplementary invoice for any reason - except fraud

Contd.

(70)

 Is Duplicate excise invoice the only document for credit

 Rule does not specify that duplicate copy is required

Contd.

(71)

 Who is a 1st/2nd stage dealer?

 What if the inputs or capital goods are received from dealers?

 Is a depot of a manufacturer a 1st stage or 2nd stage dealer?

 Who ‘purchases’ from the manufacturer

 Can inputs be purchased thro’ a dealer who is not registered

 Credit allowable only if dealer maintains account and passes on pro rata credit

 Odd sub-rule - how does one check this?

Contd.

(72)

 Manufacturer to maintain records

 Manufacturer to maintain records of

receipt, disposal, consumption, inventory of inputs and capital goods.

 Burden to prove admissibility will be on the manufacturer

 Monthly return before 10th of each month

(73)

Information relating to principal inputs(Rule-9A)

 principal input means cost of any input constitutes 10% or more in total cost of raw materials

 File ER-5 by 30^th April every year of each FY ( input/output ratio )

 if any alteration in above, then, intimate before or after 15 days of such change

 File ER-6 by 10^th of close of month regarding receipt and consumption of each principal input

(74)

Procedures and facilities for LTU(Rule-12A)

 inputs or capital goods can be transferred within plants of LTU w/o payment of duty

 provided inputs so transferred are utilized for manufacture of FG and

 such FG are cleared from factory on payment of duty or,

 exported under bond or LUT

 if not, then, receiving plant shall pay amount equal to CENVAT credit taken by sender plant plus

interest

 If capital goods are used exclusively for

manufacture of exempted goods or removed as such, receiving plant to pay duty with interest

 receiver plant however can take credit first

 CENVAT credit can be distributed among plants

(75)

Recovery of CENVAT credit wrongly taken(Rule-14)

 When credit is

 wrongly taken

 wrongly utilized

 erroneously refunded

 same will be recovered along with interest

 u/s.11A & 11AB of CE Act and u/s.73 & 75 of Finance Act

Contd.

(76)

Recovery of CENVAT credit wrongly taken(Rule-14)

 What if credit wrongly availed is not utilized ?

 Whether interest payable ?

 Maruti Udyog Ltd. [2007] (SC)

(77)

Confiscation and Penalty(Rule-15)

Rule-15(1) contravention of rules

 When credit on input/CG is

 wrongly taken

 in contravention of any provisions of rules

 such goods are liable to confiscation

 and such person is liable for penalty not exceeding credit amount or Rs. 2000

Contd.

(78)

Rule-15(2) fraud, wilful mis-statement

 When credit on input/CG is

 wrongly taken

 on account of

 fraud

 wilful mis-statement

 collusion

 suppression of facts

 contravention of act/rules with intent to evade payment of duty

 manufacturer is liable for not exceeding credit amount or Rs. 2000 plus penalty u/s.11AC of

CE Act Contd.

(79)

Rule-15(3) input services

 When credit on input services is

 wrongly taken

 without reasonable steps to check service tax is paid as per documents u/r.9

 and such person is liable for penalty not exceeding credit amount or Rs. 2000

Contd.

(80)

Rule-15(4) input services - fraud, wilful mis- statement

 When credit on input services

 wrongly taken

 on account of

 fraud

 willful mis-statement

 collusion

 suppression of facts

 contravention of act/rules with intent to evade payment of duty

 manufacturer is liable for not exceeding credit amount or Rs. 2000 plus penalty u/s.78 of

Finance Act

(81)

General Penalty(Rule-15A)

 If no penalty is prescribed and,

 contravention of any provisions of these rules

 maximum penalty of 5000

(82)



Any Queries ?????

(83)

CENVAT Credit Rules, 2004

Any Queries ?????

Thanks

