CENVAT CREDIT RULES, 2017 – III PART

[Mr. M. GOVINDARAJAN]

Returns

Rule 11(5) provides that the manufacturer of final products shall submit a monthly return in the form specified by the notification, by the Board.  The return shall be submitted within 10 days from the close of each month.  The return shall be submitted to the Superintendent of Central Excise, having jurisdiction.

If a manufacturer is availing exemption under a notification based on the value or quantity of clearances in a financial year, he shall file a quarterly return in the form specified by the Board in the Notification, within 10 days after the close of the quarter top which the return relates.

Rule 11(6) provides that a first stage dealer or second stage dealer or a registered importer shall submit within 15 days from the close of each quarter of a year to the Superintendent of Central Excise, a return in the form specified in the notification, by the Board.  The return shall be submitted electronically.

Annual return

Rule 12 provides that a manufacturer of final products shall submit to the Superintendent of Central Excise an annual return for each financial year, by the 30^th day of November of the succeeding year, in the form as specified by a notification by the Board.  The provisions of Rule 12 of Central Excise Rules, 2017, in so far as they relate to annual return shall, mutatis mutandis, apply to the annual return required to be filed in this rule.

Rule 12 of Central Excise Rules, 2017

Rule 12(2)  of Central Excise Rules, 2017 provides that every assessee shall submit to the Superintendent of Central Excise, an Annual Return for the preceding financial year to which the return relates in the form specified by notification by the Board by 30^th day of November of the succeeding year.  The Central Government may, by notification, and subject to such conditions or limitations as may be specified in such notification, specify assessee or class of assessees who may not be required to submit the Annual Return.

This provision is applicable as a whole to a 100% EOU.  Where this return is submitted after due date, the assessee shall pay to the credit of the Central Government, an amount calculated at the rate of ₹ 100/- per day subject to a maximum of ₹ 20,000/- for the period of delay in submission of return.

The assessee may file a revised annual return within a period of one month from the date of submission of the annual return.

Transfer of credit

Rule 13 provides for the transfer of CENVAT credit if a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then the manufacturer shall be allowed to transfer the credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory.

The transfer of credit shall be allowed only if the stock of inputs as such or in process, is also transferred along with the factory or business premises to the new site or ownership and the inputs, on which credit has been taken are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be.

The transfer of credit shall be allowed within a period of 3 months from the date of receipt of application by the Deputy Commissioner or the Assistant Commissioner of Central Excise.  The period may be extended by the Principal Commissioner of Central Excise or Commissioner of Central Excise, on sufficient cause being shown and reasons to be recorded in writing, for a further period not exceeding 6 months.

Transfer of credit of additional duty

The additional duty is leviable under section 3(5) of the Customs Tariff Act.  Rule 14 provides that a manufacturer or producer of final products, having more than one registered premises, for each of which registration has been obtained on the basis of a common PAN, may transfer unutilized credit of additional duty leviable under section 3(5) of the Customs Tariff Act,  may transfer unutilized credit of additional duty lying in balance with one of his registered premises at the end of a quarter to this other registered premises by-

• making an entry for such transfer in the specified documents;
• issuing a transfer challan containing registration number, name and address of the registered premises transferring the credit and receiving such credit, the amount of credit transferred and the particulars of such entry as mentioned above;

and such recipient premises may take the credit on the basis of transfer challan.

The manufacturer or producer shall submit the monthly return, as specified under these rules, separately in respect of transferring and recipient registered premises.

Transition provisions

Rule 15 provides that a person registered under CGST Act, 2017 shall transfer the credit available under the erstwhile CENVAT Credit Rules, 2004, relating to the period ending with the day immediately preceding the 01.07.2017 in his electronic credit ledger and Chapter XX of the CGST Act and the rules made there under and any credit which is not eligible for such transfer shall not be retained as credit unless eligible under these rules. 

A person registered under the CGST Act, 2017 who was not required to register under the Central Excise Act shall be deemed to be in the possession of a document evidencing payment of duty, if the manufacturer of the specified goods on which duty of central excise was leviable has issued a credit transfer document to him, in relation to such specified goods held in stock by him on 01.07.2017 for which he was not in a possession of invoice evidencing payment of duty.

What are ‘specified goods’?

The expression ‘specified goods’ shall mean such goods which have a value more than ₹ 25,000/- per piece and bear the brand name of the manufacturer of the principal manufacturer and are identifiable by a distinct number such as chassis or engine number of a car.

Recovery of credit

Rule 16 provides for recovery of credit wrongly taken or erroneously refunded.  If the credit has been taken wrongly but not utilized, the same shall be recovered from the manufacturer.    The provisions of Section 11A of the Central Excise Act, shall apply mutatis mutandis for effecting such recoveries.  If the credit has been taken and utilized wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer and the provisions of Sections 11A and 11AA of the Central Excise Act shall apply mutatis mutandis for effecting such recoveries.

Confiscation and penalty

Rule 17 provides that if any persons, takes or utilizes the credit in respect of input, wrongly or in contravention of the provisions of these rules, then all such goods shall be liable to confiscation and  such persons shall be liable to a penalty of section on 11AC (1)(a) or (b).

If the credit for input has been taken or utilized wrongly by the reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act or of the rules made there under, with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the section 11A(d) or (e) of the Central Excise Act.

An order issued under this rule shall be issued by the Central Excise Officer following the principles of natural justice.

General Penalty

Rule 18 provides that whoever contravenes the provisions of these rules  for which no penalty has been provided in the rules, he shall be liable to a penalty which may extend to ₹ 5,000/-

Imposing restrictions

Rule 19 provides that where the Central Government having regard to the extent of misuse of the credit, nature and type of such misuse and such other factors, as may be relevant, is of the opinion that in order to prevent the misuse of the provisions, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, registered importer, first stage and second stage dealer provider of taxable service or an exporter, may by notification specify the nature of restrictions including restrictions on utilization of the credit and suspension of registration in case an importer or of a dealer and type of facilities to be withdrawn and procedure for  issue of such order by the Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise, as the case  may be.

Supplementary provisions

Rule 20 provides that any notification, circular, instruction, standing order, trade notice or other order issued under the CENVAT Credit Rules, 2004 by the Central Government, the Central Board of Excise and Customs, the Principal Chief Commissioner of Central Excise or Chief Commissioner of Central excise or the Principal Commissioner of Central Excise or Commissioner of Central Excise and in force at the commencement of these rules, shall, to the extent it is relevant and consistent with these rules, be deemed to be valid and issued under the corresponding provisions of these rules.

References in any rule, notification, circular, instruction, standing order, trade notice or other order to the CENVAT Credit Rules, 2004 and any provisions thereof, on the commencement of these rules, be construed as references to the CENVAT Credit Rules, 2017 and any corresponding provision thereof.