First Stage / Second Stage Dealer - Cenvat Credit - Ready Reckoner [OLD] - Cenvat Credit

Chapter 16 First Stage / Second Stage Dealer Statutory Provisions: Rule 2(ij) , 2(s) , Rule 9(4) , 9(8) of the Cenvat Credit Rules, 2004 Rule 2(ij) first stage dealer means a dealer, who purchases the goods directly from,- (i) the manufacturer under the cover of an invoice issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or (ii) an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice; Rule 2(s) second stage dealer means a dealer who purchases the goods from a first stage dealer; Rule 9(4) The CENVAT credit in respect of input or capital goods purchased from a first stage dealer or second stage dealer shall be allowed only if such first stage dealer or second stage dealer, as the case may be, has maintained records indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him. Rule 9(8) A first stage dealer or a second stage dealer or a registered importer, as the case may be, shall submit within fifteen days from the close of each quarter of a year to the Superintendent of Central Excise, a return in the form specified, by notification, by the Board. Provided that the first stage dealer or second stage dealer or registered importer, as the case may be, shall submit the said return electronically. When the goods are procured from the manufacturer of excisable goods directly, there would be no difficulty for availing Cenvat Credit as there is a valid duty paying document issued by the manufacturer is available. However, it may not be possible always to procure the goods directly from the manufacture and the buyer has to approach the traders / dealers of such manufacturer for procuring the duty paid goods. Therefore, when goods are procured from the dealers / traders there may be loss of duty paid on the input / capital goods. To remove this difficulty of loss of the Cenvat Credit when goods are procured from the traders / dealers, the concept of First Stage / Second Stage dealer has been introduced. Rule 2(ij) specifies the meaning of First Stage Dealer and Rule 2(s) specifies the meaning of Second Stage Dealer. Accordingly the followings can issue duty paying documents: Three tier channel: 1 Manufacturer / Importer 2 First Stage Dealer procuring goods from Manufacturer / Importer 3 Second Stage Dealer procuring goods from First Stage Dealer. Four tier channel: 1 Manufacturer / Importer 2 Depot / Premises of the Consignment Agent / Any other premises from where the goods are sold on behalf of the Manufacturer / Importer 3 First Stage Dealer procuring goods from such Depot / Consignment Agent or Any other place. 4 Second Stage Dealer procuring goods from First Stage Dealer. It must be noted that the Depot / Premises of the Consignment Agent or any premises from where the goods are sold on behalf of the Manufacturer / Importer is not First Stage Dealer, however they need to obtain registration from the Excise Department for the purpose of issue of duty paying document. Multiple Godowns of a First Stage / Second Stage Dealer Where a registered person has more than one godown in the same town, he will register himself with the Superintendent having jurisdiction over his office premises but shall give details of all his godowns in his application for registration. In the case of multi Commissionerate towns such as Bombay and Calcutta, he is, in addition, also required to lodge a copy of the certificate of Registration with the respective range officers having jurisdiction over his godowns which are located in other Commissionerate. Dealer's Invoice for Cenvat The provisions of the Rule 11 of the Central Excise Rules, 2002 are applicable to First Stage / Second Stage Dealer for the purpose of issue of an Invoice. Further, rule 9(4) of the CC Rules , prescribes that the amount of duty actually paid on on goods should be indicated in the invoice of the dealer on pro-rata basis. Rule 9(4) further puts the conditions that the First / Second Dealer must maintain the proper records and documents indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods. Therefore, First Stage / Second Stage dealer can not charge or pay excise duty. They can merely pass the incidence of duty from the producer of such goods to the procurer of such goods. First Stage / Second Stage Dealer can maintain separate invoice books one for Non-Cenvat goods and another for Cenvat Goods. Invoices for Cenvat purpose must contain pre-printed serial numbers. Records to be maintained by the Dealer Rule 9(4) puts a conditions that First Stage / Second Dealer must maintain proper records. For this purpose he may maintain a register (earlier known as RG-23D) containing the details of duty paid. A dealer should submit a list in duplicate, of all the records prepared or maintained by him. Return to be filed by the Dealer A First Stage / second stage Dealer/ registered importer is required to file a quarterly return in the prescribed form with the excise department quarterly. Due date for filing of a return is - 15 th of the following month from the close of the quarter. It will be filed electronically only w.e.f. 01.10.2011.