CENVAT CREDIT – ACCOUNTS, RECORDS AND INVOICES

[Dr. Sanjiv Agarwal]

Type of Records required to be maintained by a service provider or manufacturer of final products under CENVAT Credit Rules, 2004

CENVAT Credit Rules does not prescribe any set of books of accounts. However, Rule, 9(5) states that manufacturer of final products or the provider of output services shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value duty paid, CENVAT Credit taken and utilized, the person from whom the input or capital goods have been procured is recorded. Further, Rule 9(6) states that manufacturing of final products or the provider of output services shall maintain proper records for the receipt and consumption of the input services in which relevant information regarding the value, tax paid, CENVAT Credit taken and utilized.

However, records should contain relevant information regarding the following -

(1)      Value of services,

(2)      Tax paid,

(3)      CENVAT Credit taken and utilized,

(4)      Person from whom input services has been procured.

Information regarding CENVAT Credit will be as follows -

(1)      Credit availed against each input/capital goods,

(2)      Credit utilized against payment of output services,

(3)      Balance credit available.

The CENVAT Credit Rules demand some information regarding various matters, it is on the assessee to provide these information by maintaining relevant records.

Documents which are eligible for taking CENVAT Credit

Cenvat credit should be availed only on the basis of specified documents as a proof of payment of duty in inputs or service tax on input services. These are prescribed in rule 9(1) of Cenvat Credit Rules. In terms of Rule 9(2), if there is any defect in duty paying documents, specific permission of Assistant or Deputy Commissioner of Central Excise is required

Credit can be taken on the basis of following documents -

• Invoice of Manufacturer from factory.
• Invoice of manufacturer from his depot or premises of consignment agent.
• Invoice issued by registered importer.
  • Invoice issued by importer from his premises or consignment registered with Central Excise.
  • Invoice issued by registered first stage or second stage dealer.
  • Supplementary Invoice issued by supplier-manufacturer or service provider.
  • Bill of Entry.
    • Certificate issued by an Appraiser of Customs in respect of goods imported through foreign post office.
    • Challan of payment of tax where service tax is payable by other than input service provider (GAR 7).
    • Challan of payment of service tax paid by the service receiver on reverse charge basis.
    • Invoice, bill or challan issued by provider of input service on or after 10-9-2004.
      • Invoice, Bill or challan issued by input service provider under Rule 4A of Service Tax Rules.

Format of the Invoice/bill/challan to be issued

No format of invoice/bill has been prescribed. However, the same should contain the following information in terms of Service Tax Rules (Rule 4A) and CENVAT Credit Rules [Rule 9(2)]: -

(i)     Name, address and Regn. No. of the service provider.

(ii)    Sl. No. and date.

(iii)   Name and address of the input service distributor.

(iv)   The name and address of the recipient to whom the service tax credit is distributed.

(v)    The amount of credit being distributed.

Vide Notification No. 10/2007-CE(NT) dated 1.3.2007, w.e.f. 1.3.2007, Rule 9(2) of CENVAT Credit Rules, 2004 provide that CENVAT Credit shall be allowed to the output service provider of taxable service if all the particulars as stipulated in Central Excise Rules, 2002 or Service Tax Rules, 1994 are contained in the duty paying documents on the basis of which such output service provider seeks to avails the CENVAT Credit. Thus, the invoice or challan or any other document is required to be in line with provision of Excise Rules or Service Tax Rules, i.e., prepared in accordance with respective rules. Rule 9(2) provides that Deputy Commissioner or Assistant Commissioner may allow the credit of CENVAT if Deputy Commissioner or Assistant Commissioner is satisfied that the goods and services as specified in the duty paying documents have been duly received and accounted for in the books of accounts of the receiver of service and such documents contains the required particulars, viz., -

-         details of excise duty or service tax payable

-         description of goods or taxable services

-         assessable value

-         name and address of factory/warehouse/premises of first or second stage dealer/service provider.