Refund of Cenvat Credit - Cenvat Credit - Ready Reckoner [OLD] - Cenvat Credit

Chapter 11 Refund of Cenvat Credit Statutory Provisions: Rule 5 of the Cenvat Credit Rules, 2004 Rule 5 - Refund of CENVAT Credit A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette: Refund amount = (Export turnover of goods+ Export turnover of services) x Net CENVAT credit Total turnover Where,- (A) Refund amount means the maximum refund that is admissible; (B) Net CENVAT credit means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of rule 3 , during the relevant period; (C) Export turnover of goods means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking; (D) Export turnover of services means the value of the export service calculated in the following manner, namely:- Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period advances received for export services for which the provision of service has not been completed during the relevant period; (E) Total turnover means sum total of the value of - (a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported; (b) export turnover of services determined in terms of clause (D) of sub-rule (1) above and the value of all other services, during the relevant period; and (c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed. Provided that the refund may be claimed under this rule, as existing, prior to the commencement of the CENVAT Credit (Third Amendment) Rules, 2012, within a period of one year from such commencement. Provided further that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995 , or claims rebate of duty under the Central Excise Rules, 2002 , in respect of such duty; or claims rebate of service tax under the Service Tax Rules, 1994 in respect of such tax. Explanation 1 . - For the purposes of this rule,- (1) export service means a service which is provided as per rule 6A of the Service Tax Rules 1994 , whether the payment is received or not; (2) relevant period means the period for which the claim is filed. Explanation 2 .- For the purposes of this rule, the value of services, shall be determined in the same manner as the value for the purposes of sub-rule (3) and (3A) of rule 6 is determined.] ===================================== For conditions, safeguard and limitation prescribed by the Central Govt - see below 1 Refund of Cenvat Credit of input and input services is allowed but of Capital Goods is not allowed. 2 Manufacturer or output service provider is required to adjust the Cenvat Credit first towards the other liability of Central Excise or Service Tax as the case may be. 3 If the Cenvat Credit is so utilized or able to be utilized the question of refund does not arise. 4 If the Cenvat Credit can not be utilized to pay excise duty or service tax as the case may, an application for refund may be made. 5 However, only one benefit can be availed either to avail the Cenvat Credit and get refund or get the Duty Drawback. Where no duty drawback is availed corresponding to the duty or tax, refund shall be allowed. 6 Manufacturer or Output service provider is required to follow procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette. Refer Notification No. 27 /2012-CE (N.T.) dated 18 th June, 2012. 7 Refund application shall be filed quarterly. One refund application is allowed in a quarter except in case, any person exporting goods services both at the same time, he can file two refund application in a quarter. 8 Application shall be filed in the prescribed form - Form A annex to the Notification No. 27 /2012-CE (N.T.). 9 The refund application shall be filed with the Divisional Office (i.e. AC / DC) 10 Refund shall be allowed in proportion to export turnover and total turnover of the assesse during the relevant quarter as calculated by the formula given in Rule 5. Amount calculated as per formula is the maximum amount of refund which can be admissible. 11. In case of refund claim, in respect of export of services shall be accompanied by a certificate in Annexure A-I (annex to the Notification No. 27 /2012-CE (N.T.) ), duly signed by the auditor (statutory or any other) certifying the correctness of refund claimed. 12. AC/ DC may call for such other documents to support refund claim before sanctioning the refund claim. 13. Refund may be allowed in full or part. 14. F o r more details please refer to Notification No. 27 /2012-CE (N.T.) dated 18-6-2012. Some important points need to be noted in Refund - Correlation between input and output is not required under rule 5 for refund. - Full refund of duty paid on inputs is admissible, even if duty on final product is less.