Central Excise (Amendment) Rules, 1997 - 06/97 - Central Excise - Non Tariff

Central Excise (Amendment) Rules, 1997

Notification No. 6/97-C.E. (N.T.)

Dated 1-3-1997

In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Central Excise Rules, 1944, namely :-

1. (1) These rules may be called the Central Excise (Amendment) Rules, 1997.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In rule 2 of the Central Excise Rules, 1944 (hereinafter referred to as the said rules), after clause (ix), the following clause shall be inserted, namely :-

`(ixa) "procurer" means any person who receives molasses manufactured in a khandsari sugar factory, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, and is liable for payment of duty assessed on such molasses;'.

3. To rule 7 of the said rules, the following proviso shall be added at the end, namely:-

"Provided that nothing contained in this rule shall apply to molasses produced in a khandsari sugar factory.".

4. After rule 7 of the said rules, the following rule shall be inserted, namely:-

"7A. Recovery of duty on molasses produced by a khandsari sugar factory .- Every person who procures molasses produced in a khandsari sugar factory, whether directly from such factory or otherwise, for use in the manufacture of any commodity, whether or not excisable, shall pay the duty or duties leviable on such molasses, as if such molasses has been manufactured by the procurer, at such time and to such persons as may be designated under these rules, whether the payment of such duty or duties be secured by bond or otherwise.".

5. In rule 9 of the said rules, in sub-rule (1), after the first proviso, the following proviso shall be inserted, namely:-

"Provided further that the molasses produced in a khandsari sugar factory may be removed without payment of duty leviable thereon and the duty of excise leviable on such molasses shall be paid by the procurer, as if such molasses has been manufactured by such procurer, on the date of receipt of such molasses in his factory.".

6. In rule 9A of the said rules, in sub-rule (1 ), -

(a) in clause (i), the word "and" occurring at the end shall be omitted;

(b) in clause (ii), for the word "warehouse.", the words "warehouse; and", shall be substituted;

(c) after clause (ii), the following clause shall be inserted, namely :-

"(iii) in the case of molasses manufactured in a khandsari sugar factory, on the date of receipt of such molasses in the factory of the procurer."

7. After rule 9B of the said rules, the following rule shall be inserted, namely:-

"9C. Rules to apply to procurer .- The provisions of these rules shall apply to a procurer of molasses as if such molasses has been manufactured by him.".

8. In Chapter V of the said rules, -

(a) for section AA, the following section shall be substituted, namely:-

"AA. CREDIT OF DUTY PAID ON EXCISABLE GOODS USED AS INPUTS

57A. Applicability. - (1) The provisions of this section shall apply to such finished excisable goods (hereafter, in this section, referred to as the final products) as the Central Government may, by notification in the Official Gazette, specify in this behalf for the purpose of allowing credit of any duty of excise or the additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975), as may be specified in the said notification (hereafter, in this section, referred to as the specified duty) paid on the goods used in the manufacture of the said final products (hereafter, in this section, referred to as the inputs).

(2) The credit of specified duty allowed under sub-rule (1) shall be utilised towards payment of duty of excise leviable on the final products, whether under the Act or under any other Act, as may be specified in the notification issued under sub-rule (1) and subject to the provisions of this section and the conditions and restrictions, if any, specified in the said notification.

(3) The Central Government may also specify in the said notification the goods or classes of goods in respect of which the credit of specified duty may be restricted.

(4) The credit of specified duty under this section shall be allowed on inputs used in the manufacture of final products as well as on inputs used in or in relation to the manufacture of the final products whether directly or indirectly and whether contained in the final product or not.

(5) Notwithstanding anything contained in sub-rule (1), the Central Government may, by notification in the Official Gazette declare the inputs on which declared duties of excise or additional duty (hereinafter referred to as declared duty) paid shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow the credit of such declared duty deemed to have been paid in such manner and subject to such conditions as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer of final products declared in the said notification, but are contained in the said final products.

Explanation.- For the purposes of the sub-rule, it is clarified that even if the declared inputs are used directly by a manufacturer of final products, the credit of the declared duty shall, notwithstanding the actual amount of duty paid on such declared inputs, be deemed to be equivalent to the amount specified in the said notification and the credit of the declared duty shall be allowed to such manufacturer.

57B. Eligibility of credit of duty on certain goods. - (1) Notwithstanding anything contained in rule 57A, the manufacturer of final products shall be allowed to take credit of the specified duty paid on the following goods, used in or in relation to the manufacture of the final products, whether directly or indirectly and whether contained in the final products or not, namely:-

(i) goods which are manufactured and used within the factory of production;

(ii) paints;

(iii) goods used as fuel;

(iv) goods used for generation of electricity or steam, used for manufacture of final products or for any other purpose, within the factory of production;

(v) packing materials and materials from which such packing materials are made provided the cost of such packing materials is included in the value of the final product;

(vi) accessories of the final product cleared alongwith such final product, the value of which is included in the assessable value of the final product.

(2) The manufacturer of the final products shall not be allowed to take credit of the duty paid on the following goods, namely : -

(i) machines, machinery, equipment, apparatus, tools, appliances or capital goods as defined in rule 57Q (other than those used as component parts in the manufacture of final products), used for any purpose in the factory;

(ii) packing materials in respect of which any exemption to the extent of the duty of excise payable on the cost of the packing materials is being availed of for packing any final products;

(iii) packing materials or containers, the cost of which is not included in the value of the final products under section 4 of the Act;

(iv) crates and glass bottles used for aerated water; and

(v) lubricating oils, greases, cutting oils and coolants.

57C. Credit of duty not to be allowed if final products are exempt. - (1) No credit of the specified duty shall be allowed on such quantity of inputs which is used in the manufacture of final products on which no amount of excise duty is payable for any reason except when the final products are either, -

(i) cleared to a unit in a Free Trade Zone; or

(ii) cleared to a hundred per cent export-oriented undertaking; or

(iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Parks; or

(iv) supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excises, dated 28th August, 1995.

(2) Where a manufacturer avails of the credit of specified duty on any inputs and he is engaged in the manufacture of any final product which is chargeable to duty as well as in the manufacture of any other final product which is not chargeable to duty in the same factory, the provisions of sub-rule (1) shall be deemed to be satisfied only when the manufacturer follows the procedure prescribed in sub-rule (1) of rule 57CC or the provisions of sub-rule (9) of that rule are complied with.

(3) Sub-rule (2) shall not apply to inputs intended to be used as fuel.

(4) Sub-rule (2) shall also not apply when the final product manufactured by the manufacturer is exempt from duty of excise on account of the fact that it is cleared to a unit in a free trade zone or to a hundred per cent export-oriented undertaking or to a unit in an Electronic Hardware Technology Parks or Software Technology Parks or supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excises, dated the 28th August, 1995.

57CC. Adjustment of credit on inputs used in exempted final products or maintenance of separate inventory and accounts of inputs by the manufacturer. - (1) Where a manufacturer is engaged in the manufacture of any final product which is chargeable to duty as well as in any other final product which is not chargeable to duty and the manufacturer takes credit of the specified duty on any inputs (other than inputs used as fuel) which is used or ordinarily used in or in relation to the manufacture of both the aforesaid categories of final products, whether directly or indirectly and whether contained in the said final products or not, the manufacturer shall, unless the provisions of sub-rule (9) are complied with, pay an amount equal to eight per cent of the price (excluding sales tax and other taxes, if any, payable on such goods) of the second category of final products charged by the manufacturer for the sale of such goods at the time of their clearance from the factory.

(2) The amount mentioned in sub-rule (1) shall be paid by the manufacturer by adjustment in the credit account maintained under sub-rule (7) of rule 57G or in the accounts maintained under rule 9 or sub-rule (1) of rule 173G and if such adjustment is not possible for any reason, the amount shall be paid in cash by the manufacturer availing of credit under rule 57A.

(3) The provisions of sub-rule (1) shall not apply to final products falling under Chapters 50 to 63 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).

(4) The provisions of sub-rule (1) shall also not apply to -

(a) articles of plastics falling within Chapter 39;

(b) tyres of a kind used on animal drawn vehicles or handcarts and their tubes, falling within Chapter 40;

(c) Black and White television sets, falling within Chapter 85; and

(d) Newsprint, in rolls or sheets, falling within Chapter heading No. 48.01;

which are exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty.

(5) In the case of final products referred to in sub-rule (3) or sub-rule (4) and excluded from the provisions of sub-rule (1), the manufacturer shall pay an amount equivalent to the credit of duty attributable to inputs contained in such final products at the time of their clearance from the factory.

(6) The provisions of sub-rule (1) shall also not apply to final products which are exported under bond in terms of the provisions of rule 13.

(7) The provisions of sub-rule (1) shall apply even if the inputs on which credit has been taken are not actually used or contained in any particular clearance of final products.

(8) If any goods are not sold by the manufacturer at the factory gate but are sold from a depot or from the premises of a consignment agent or from any other premises, the price (excluding sales tax and other taxes, if any, payable) at which such goods are ordinarily sold by the manufacturer from such depot or from the premises of a consignment agent or from any other premises shall be deemed to be the price for the purpose of sub-rule ( 1 ) .

(9) In respect of inputs (other than inputs used as fuel) which are used in or in relation to the manufacture of any goods, which are exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty, the manufacturer shall maintain separate inventory and accounts of the receipt and use of inputs for the aforesaid purpose and shall not take credit of the specified duty paid on such inputs.

57D. Credit of duty not to be denied or varied in certain circumstances. - (1) Credit of specified duty shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse, or by-product arising during the manufacture of the final product, or that the inputs have become waste during the course of manufacture of the final product, whether or not such waste or refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or is not specified as a final product under rule 57A.

(2) Credit of specified duty shall also not be denied or varied in case any intermediate products have come into existence during the course of manufacture of final products or the inputs are used in the manufacture of capital goods as defined in rule 57Q and such intermediate products or capital goods are not chargeable to duty of excise.

57E. Adjustment in duty credit. - (1) If a manufacturer of final products has taken credit on any inputs and subsequently it so happens that any refund of the duty paid by the manufacturer of inputs or importer of inputs, as the case may be, is allowed to him for any reason, then the manufacturer of the final products shall accordingly adjust the amount of credit in his credit account and if such adjustment is not possible for any reason, the manufacturer of the final products shall pay the amount in cash equal to the amount of refund allowed to the manufacturer of inputs or importer of inputs.

(2) If a manufacturer of the final products has not taken any credit or has taken credit on any inputs and subsequently it so happens that any additional amount of duty is recovered by the manufacturer of such inputs or importer of such inputs in respect of such inputs, then the manufacturer of the final products shall be allowed an additional credit equal to the amount of duty so recovered, if the manufacturer or importer of such inputs has passed on the incidence of the additional amount of duty to the manufacturer of final products.

(3) The provisions of sub-rule (2) shall not apply in cases where the additional amount of duty became recoverable from the manufacturer or importer of inputs on account of any short levy or non-levy by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any provisions of the Act or rules made thereunder with intent to evade payment of duty.

(4) No additional credit under sub-rule (2) shall be allowed to a manufacturer of the final products unless he produces a certificate issued by the Superintendent of Central Excise having jurisdiction over the factory of the manufacturer of inputs or, as the case may be, by the proper officer in the customs area, from where such inputs were originally cleared.

(5) The certificate required to be produced under sub-rule (4) shall indicate the full description of the inputs, original duty paid and the particulars of the documents under which the inputs were cleared from the factory or, as the case may be, from the customs area and also the particulars of differential duty recovered from the manufacturer or the importer.

57F. Manner of utilisation of inputs and the credit allowed in respect of duty paid thereon. - (1) The inputs on which credit has been taken may be used in or in relation to the manufacture of final products.

(2) The inputs may be removed, after intimating the Assistant Commissioner of Central Excise concerned, in writing, for home consumption or for export under bond.

(3) All removals of inputs for home consumption shall be made -

(a) on payment of duty equal to the amount of credit availed in respect of such inputs; and

(b) under the cover of invoice prescribed under rule 52A.

(4) The inputs can also be removed as such or after they have been partially processed by the manufacturer of the final products to a place outside his factory under the cover of a challan specified in this behalf by the Central Board of Excise and Customs, for the purposes of test, repair, refining, re-conditioning or carrying out any other operation necessary for the manufacture of the final products or for manufacture of intermediate products necessary for the manufacture of final products and return the same to his factory within a period of sixty days or such extended period as the Assistant Commissioner of Central Excise may allow in this behalf, for, -

(i) further use in the manufacture of the final product; or

(ii) removing after payment of duty for home consumption; or

(iii) removing the same without payment of duty under bond for export.

(5) (i) The waste, if any, arising in the course of any operation mentioned in sub-rule (4) shall be returned to the factory of the manufacturer of final products.

(ii) No such waste as is referred to in clause (i) is required to be returned to the factory of the manufacturer of final products if the excise duty payable on such waste is paid.

(6) (i) Where a manufacturer removes the inputs as such or in the partially processed form to a place outside his factory for the purposes specified in sub-rule (4), the manufacturer shall do so only after debiting an amount equal to ten per cent of the value of such inputs or, as the case may be, the partially processed inputs declared by him on the challan under which such inputs or partially processed inputs are cleared from his factory.

(ii) The debit shall be made in the account maintained under sub-rule (7) of rule 57G or the account-current maintained under rule 9 or sub-rule (1) of rule 173G.

(7) Notwithstanding anything contained in rule 57A, the manufacturer shall be eligible to take credit of an amount equal to the amount debited by him under sub-rule (6) when the inputs or partially processed inputs, as the case may be, are received back in full in his factory, in the account maintained under sub-rule (7) of rule 57G.

(8) A manufacturer shall take credit under sub-rule (7) only after the entire quantity of the inputs or the partially processed inputs, as the case may be, but excluding the waste, if any, arising in the course of operation outside the factory of the manufacturer, or otherwise, is received back in his factory.

(9) A manufacturer shall not take credit under sub-rule (7) unless the inputs or the partially processed inputs are received back in his factory under the cover of the duplicate copy of the challan on which such inputs or partially processed inputs were removed from his factory.

(10) If the Assistant Commissioner of Central Excise is satisfied that the duplicate copy of the challan has been lost in transit, he may allow a manufacturer of final products to take credit under sub-rule (7) on the basis of the triplicate copy of the challan.

(11) If the inputs or partially processed inputs are not received back in the factory of the manufacturer of final products within a period of sixty days or the extended period, as may be allowed by the Assistant Commissioner of Central Excise, the manufacturer shall recalculate the amount of actual credit attributable to such inputs or on inputs contained in the partially processed inputs and thereafter he shall adjust the differential amount, if any, after taking into account the amount already debited while sending the inputs or partially processed inputs from his factory.

(12) Credit of specified duty allowed in respect of any inputs may be utilised by the manufacturer of the final products towards payment of duty of excise on any of the following, namely : -

(a) on any of the final products in the manufacture of which such inputs are intended to be used in accordance with the declaration filed under rule 57G; or

(b) on the waste, if any, arising in the course of manufacture of the final products; or

(c) on the inputs themselves if such inputs are removed as such under sub-rule (3).

(13) Where any inputs are used in the final products which are cleared for export under bond or used in the intermediate products cleared for export in accordance with sub-rule (4), the credit of specified duty in respect of the inputs so used shall be allowed to be utilised by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification in the Official Gazette.

(14) No refund of credit mentioned in sub-rule (13) shall be allowed if the manufacturer avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under rule 12, in respect of such duty.

(15) Where any inputs are used in the final products cleared either to a unit in a free trade zone or to a unit of a hundred per cent export oriented undertaking or to a unit in an Electronic Hardware Technology Park or to a unit in Software Technology Parks or supplied to the United Nations or an International Organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95-Central Excises, dated the 28th August, 1995, under bond, the credit of specified duty in respect of such inputs shall be allowed to the manufacturer. The credit so allowed can be used for payment of duty on any final product.

(16) The manufacturer shall also be allowed to utilise the credit of specified duties towards adjustment of the credit, as required to be made under sub-rule (6) of rule 57CC.

(17) Notwithstanding anything contained in sub-rule (12) or rule 57A, any credit of specified duty lying unutilised, -

(a) on the sixteenth day of March, 1995, with the manufacturer of tractors falling under heading No.87.01 or motor vehicles falling under heading Nos.87.02 and 87.04 or chassis of such tractors or such motor vehicles falling under heading No. 87.06 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or for export :

Provided that nothing contained in this clause shall apply to credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock on the sixteenth day of March, 1995;

(b) on the first day of March 1997, with the manufacturer of bulk drugs falling under Chapter 28 or 29 and with the manufacturers of black and white picture tubes falling under sub-heading No. 8540.12 shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or for export :

Provided that nothing contained in this clause shall apply to credit of duty, if any, in respect of inputs lying in stock or contained in finished products lying in stock on the first day of March, 1997.

(18) Any waste, arising from the processing of inputs, in respect of which credit has been taken may be -

(a) removed on payment of duty as if such waste is manufactured in the factory; or

(b) removed without payment of duty, where such waste belongs to such class or category of wastes as the Central Government may, from time to time, by notification in the Official Gazette, specify for the purpose of being used in the manufacture of the class or categories of goods as may be specified in the said notification, subject to the procedure under Chapter X being followed; or

(c) destroyed in the presence of the proper officer on the application by the manufacturer and if found unfit for further use, or not worth the duty payable thereon, the duty payable thereon being remitted.

(19) The waste as referred to in sub-rule (18) may be destroyed by the manufacturer governed by Chapter VIIA after informing the proper officer in writing indicating therein the quantity of such waste and the date on which he proposes to destroy the waste, at least seven days in advance and after observing such further conditions as may be specified by the Commissioner by a general or special order with regard to the manner of disposal of such waste.

(20) On an application made by a manufacturer of the final products, the Commissioner may, subject to such conditions and limitations as he may impose, permit a manufacturer having credit in his account in Form RG 23A maintained under rule 57G and lying unutilised, on account of shifting of the factory belonging to the manufacturer, to another site, or on account of change in ownership, or change in the site of a factory resulting from sale, merger, amalgamation or transfer to a joint venture with the specific provision for transfer of liabilities of the old factory, to transfer such unutilised credit to such transferred, sold, merged or amalgamated factory.

(21) The credit under sub-rule (20) shall be allowed only if the stock of inputs as such or in process is also transferred along with the factory to the new site or ownership and the inputs on which credit has been availed of are duly accounted for to the satisfaction of the Commissioner.

57G. Procedure to be observed by the manufacturer. - (1) Every manufacturer intending to take credit of the duty paid on inputs under rule 57A, shall file a declaration with the Assistant Commissioner of Central Excise having jurisdiction over his factory, indicating the description of the final products manufactured in his factory and the inputs intended to be used in the said final products and such other information as the said Assistant Commissioner may require, and obtain a dated acknowledgement of the said declaration.

(2) A manufacturer who has filed a declaration under sub-rule (1) may, after obtaining the acknowledgement aforesaid, take credit of the duty on the inputs received by him.

(3) No credit under sub-rule (2), shall be taken by the manufacturer unless the inputs are received in the factory under the cover of any of the following documents, namely :-

(a) an invoice issued by a manufacturer of inputs under rule 52A or 100E of the said rules;

(b) an invoice issued by the manufacturer of inputs from his depot or from the 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 provided the depot or the premises, as the case may be, is registered under rule 174;

(c) triplicate copy of a bill of entry;

(d) a certificate issued by an Appraiser of Customs posted in foreign post office;

(e) an invoice issued by a first stage dealer of excisable goods, registered under rule 174;

(f) an invoice issued by a second stage dealer of excisable goods registered under rule 174 and duly authenticated by the proper officer;

(g) an invoice issued by a dealer on or before the 31st day of August, 1996;

(h) an invoice issued by an importer registered under rule 174 and duly authenticated by the proper officer;

(i) an invoice issued by an importer from his depot or fromthe premises of the consignment agent of the said importer provided the said depot or the premises, as the case may be, is registered under rule 174, and duly authenticated by the proper officer;

(j) an invoice issued by a first stage or second stage dealer of imported goods registered under rule 174 and duly authenticated by the proper officer;

(k) duplicate copy of a bill of entry generated on Electronic Data Interchange System installed in any customs or Central Excise Commissionerate;

(l) a certificate issued by the Superintendent of Central Excise or by the proper officer in the Customs area under rule 57E; and

(m) an invoice issued by a manufacturer of final products under sub-rule (3) of rule 57F or sub-rule (1) of rule 57S.

Explanation. - For the purposes of this section,-

(i) "first stage dealer" means a dealer who purchases the goods directly from -

(a) the manufacturer under the cover of an invoice issued under rule 52A or rule 100E 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 issued under rule 57G; or

(b) 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 issued under rule 57G.

(ii) "second stage dealer" means a dealer who purchases the goods from a first stage dealer.

(4) No credit shall be taken by the manufacturer in respect of invoices referred to in clause (g) of sub-rule (3) after the 30th September, 1996.

(5) Credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) and where the intermediate products manufactured by the user of inputs specified under rule 57J are received by the manufacturer, after nine months.

(6) Notwithstanding anything contained in sub-rule (3) or rule 52A, a manufacturer may take credit on inputs received in his factory on the basis of original invoice, if duplicate copy of the invoice has been lost in transit, subject to the satisfaction of the Assistant Commissioner that the inputs have been received in his factory and the duty was paid on such inputs.

(7) A manufacturer of the final products shall maintain, -

(a) an account in Form RG 23A, Parts I and II;

(b) in respect of duty payable on final products, an account-current with adequate balance to cover the duty of excise payable on the final products cleared at any time.

(8) A manufacturer of final products shall submit within five days after the close of each month to the Superintendent of Central Excise, a monthly return indicating the particulars of inputs received during the month and the amount of credit taken. The manufacturer shall also submit original duty paying documents and extracts of Part I and Part II of Form RG 23A maintained alongwith the monthly return :

Provided that the Commissioner may, having regard to the nature, variety and extent of production or manufacture of frequency of removals -

(i) fix in relation to any assessee or class of assessees a period shorter than one month for filing the aforesaid return;

(ii) permit that the aforesaid return may be filed by the assessee within a period not exceeding twenty-one days after the close of each month :

Provided further that in respect of a manufacturer availing of any exemption based on the value or quantity of clearances in a financial year, the provisions of this sub-rule shall have effect in that financial year as if for the expression "month", the expression "quarter" were substituted.

(9) Where a manufacturer was, for sufficient reasons, not in a position to make a declaration under sub-rule (1) and makes the declaration subsequently, the Assistant Commissioner may, subject to the provisions of sub-rule (10) and for reasons to be recorded in writing, condone the delay in filing of such declarations and allow the manufacturer to take credit of the duty already paid on the inputs.

(10) The Assistant Commissioner shall not condone the delay unless he is satisfied that:

(i) the inputs were received in the factory not before a period of six months from the date of filing of such declaration;

(ii) the amount of duty for which credit is sought has actually been paid on such inputs; and

(iii) the inputs have actually been used or are to be used in the manufacture of final products.

57GG. Procedure to be followed by persons issuing invoices under rule 57G or rule 57T. - (1) Every person, who issues invoices under rule 57G or, as the case may be, under rule 57T, shall get registered under rule 174.

(2) Every person registered for the purposes of this rule (hereafter in this section referred to as the registered person) shall maintain a stock account in Form R.G. 23D.

(3) The registered person shall maintain the R.G. 23D register at the end of the day of receipt and issue of excisable goods, and shall -

(a) at the time of making any entry, insert the date when the entry is made;

(b) correctly keep such book, account or register in the manner required, under these rules and shall not cancel, obliterate, or alter any entry therein, except for correction of any errors;

(c) keep the book, account or register ready for inspection by the officers, and shall permit any officer to inspect it and make such minute therein or take any extract therefrom, as such officer may think fit;

(d) at any time, if demanded by the officer, send the records referred to in clause (c), to the proper officer.

(4) The registered person shall issue an invoice containing such details as may be specified by the Central Board of Excise and Customs or the Commissioner.

(5) (a) The invoice shall be made out in quadruplicate. The copies of the invoice shall be marked at the top in bold capital letters in the following manner, namely :-

(i) The original copy shall be marked as ORIGINAL FOR BUYER and that copy shall be given to the buyer.

(ii) The duplicate copy shall be marked as DUPLICATE FOR TRANSPORTER and that copy shall be used for taking credit under rule 57G or, as the case may be, for making receipt entries in register maintained under this rule.

(iii) The triplicate copy shall be marked as TRIPLICATE FOR CENTRAL EXCISE and that copy shall be sent to the proper officer.

(iv) The quadruplicate copy shall be marked as QUADRUPLICATE FOR REGISTERED PERSON and that copy shall be retained by the registered person for his record.

(b) The copies of the invoices issued by a first stage dealer and a second stage dealer shall also be marked at the top in bold capital letters as FIRST STAGE DEALER and SECOND STAGE DEALER respectively.

(6) (i) Each invoice shall bear a printed serial number running for the whole financial year beginning on the 1st April of each year.

(ii) The registered person shall use only one invoice book at any one time unless otherwise permitted by the Commissioner in writing.

(7) (i) Each foil of the invoice book shall be authenticated by the owner or the working partner or the Managing Director or the Company Secretary, before being used by the registered person.

(ii) The registered person shall intimate the serial number of the invoice before being used to the Assistant Commissioner of Central Excise and the dated acknowledgement of receipt of such intimation shall be retained by the said registered person.

(8) (i) It shall be permissible to use records and invoices generated through computers.

(ii) When the invoice is generated through a computer, the registered person shall intimate the serial number likely to be used in the forthcoming quarter and as soon as the same is exhausted, a revised intimation shall be sent.

(iii) The registered person shall also send details of the software used including the format used for information of the Assistant Commissioner.

(9) (i) The registered person shall issue only one invoice in respect of the consignment if all the packages comprising the said consignment are despatched in one lot at any one time.

(ii) If a consignment is split up into two or more lots and each such consignment is despatched separately either on the same day or on different days, a separate invoice shall be made out in respect of each lot.

(iii) Separate invoice shall be issued in case a consignment is loaded on more than one vehicle, vessel, pack animal or other means of conveyance which do not travel together but travel separately or at intervals.

(10) The registered person shall, within seven days after the close of each month, submit to the Range Superintendent, a monthly return and other documents as the Central Board of Excise and Customs or the Commissioner may specify, for the purpose of verification by the said Range Superintendent.

(11) The registered person shall preserve documents specified under rule 57GG for a period of five years and shall, on demand, produce the same to the Central Excise officer.

(12) The registered person shall, within seven days of close of each month, submit duplicate copies of the invoices issued under rule 52A or 57G to the Superintendent of Central Excise with whom such person is registered, and -

(a) where the entire quantity shown in the invoice has been sold, deface the same with the remarks

`MODVAT ALLOWED - NOT TO BE USED AGAIN'; and

(b) where the entire quantity has not been sold, the Range Superintendent shall endorse on the back of the invoice, details relating to the quantity received, quantity issued, total amount of duty available as input stage credit (hereafter referred to as the said duty), amount of the said duty for which invoices have been issued, and the balance quantity and the balance amount of the said duty available for issuing invoices.

57H. Transitional provisions. - (1) Notwithstanding anything contained in rule 57G, a manufacturer intending to avail of credit of duty paid on inputs received by him immediately before obtaining the dated acknowledgment of the declaration made under that rule, shall file a declaration under this sub-rule with the jurisdictional Assistant Commissioner of Central Excise stating that -

(a) such inputs are lying in stock, or are received in the factory after filing the declaration made under rule 57G; or

(b) such inputs are used in the manufacture of final products which are cleared from the factory after filing the declaration made under rule 57G, and that no credit has been taken by the manufacturer in respect of such inputs under any other rule or notification.

(2) The credit under sub-rule (1) shall not be available in case the final product is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty.

(3) Every manufacturer who, immediately before filing a declaration under rule 57G, has been availing of, -

(a) the special procedure under rule 56A, in respect of materials or component parts for use in the manufacture of finished excisable goods; or

(b) an exemption for giving credit with respect to the duty paid on the materials or component parts used in the manufacture of finished excisable goods, shall file a declaration under this sub-rule with the Assistant Commissioner of Central Excise having jurisdiction over his factory, stating that he intends to transfer credit of duty paid on the said materials or component parts received by such manufacturer and lying unutilised immediately before obtaining the dated acknowledgment of the declaration made under rule 57G in his account in R.G. 23 to his account in R.G. 23A.

(4) Transfer of credit under sub-rule (3) shall be allowed if the materials and component parts and the finished excisable goods have been specified as inputs and final products, respectively, in the notification issued under rule 57A.

(5) A manufacturer who has filed a declaration under sub-rule (1) or sub-rule (3) may, after obtaining the dated acknowledgment as aforesaid, take credit of the duty paid on the inputs received by him.

(6) The manufacturer shall take credit under sub-rule (5) only if the inputs were received in the factory under the cover of a document as specified under rule 57G evidencing the payment of duty on such inputs and such evidence is made available by the assessee to the Assistant Commissioner of Central Excise.

(7) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been availing of the credit of the duty paid on inputs before such option is exercised, shall be required to pay an amount equivalent to the credit, if any, allowed to him in respect of inputs lying in stock or used in any finished excisable goods lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilised for payment of duty on any excisable goods, whether cleared for home consumption or for export.

57I. Recovery of credit wrongly availed of or utilised in an irregular manner. - (1) (i) Where credit of duty paid on inputs has been taken on account of an error, omission or mis-construction, on the part of an officer or a manufacturer, or an assessee, the proper officer may, within six months from the date of filing the return as required to be submitted in terms of sub-rule (8) of rule 57G, and where no such return as aforesaid is filed, within six months from the last date on which such return is to be filed under the said rule, serve notice on the manufacturer or the assessee who has taken such credit requiring him to show cause why he should not be disallowed such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him.

(ii) Where a manufacturer has taken the credit by reason of fraud, wilful mis-statement, collusion, or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the provisions of clause (i) shall have effect as if for the words `six months', the words `five years' were substituted.

(iii) The proper officer, after considering the representation, if any, made by the manufacturer or the assessee on whom notice is served under clause (i), shall determine the amount of such credit to be disallowed (not being in excess of the amount specified in the show cause notice) and thereupon such manufacturer or assessee shall pay the amount equivalent to the credit disallowed, if the credit has been utilised, or shall not utilise the credit thus disallowed.

Explanation. - Where the service of the notice is stayed by an order of a court of law, the period of such stay shall be excluded from computing the aforesaid period of six months or five years, as the case may be.

(2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section, the manufacturer shall, upon a written demand being made by the Assistant Commissioner of Central Excise, pay the duty leviable on such inputs within three months from the date of receipt of the notice of demand.

(3) Where a manufacturer or an assessee fails to pay the amount determined under sub-rule (1) or sub-rule (2) within three months from the date of receipt of demand notice, he shall pay, in addition to the amount so determined, interest at such rate, as may be fixed, by the Central Board of Excise and Customs under section 11AA of the Act, from the date immediately after the expiry of the said period of three months till the date of payment.

(4) Where the credit of duty paid on inputs has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed as determined under clause (iii) of sub-rule (1) shall also be liable to pay a penalty equal to the credit so disallowed.

Explanation I. - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the penalty shall be payable on such reduced amount of credit disallowed.

Explanation II. - Where the credit disallowed is increased or further increased by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the penalty shall be payable on such increased or further increased, amount of credit disallowed.

(5) Notwithstanding anything contained in clause (iii) of sub-rule (1) or sub-rule (3), where the credit of duty paid on inputs has been taken wrongly on account of fraud, wilful mis-statement, collusion, or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed, as determined under clause (iii) of sub-rule (1), shall also be liable to pay interest at such rate as may be fixed by the Board under section 11AA of the Act from the first day of the month succeeding the month in which the credit was wrongly taken, till the date of payment of such amount.

ExplanationI. - For the removal of doubts, it is hereby declared that the provisions of this sub-rule shall not apply to cases where the credit disallowed became payable before the 23rd day of July, 1996.

Explanation II. - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the interest shall be payable on such reduced amount of credit disallowed.

Explanation III. - Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the interest shall be payable on such increased, or further increased, amount of credit disallowed.

57J. Credit of duty in respect of inputs used in an intermediate product. - (1) Notwithstanding anything contained in these rules, the manufacturer shall be allowed to take credit of the specified duty paid on inputs described in column (2) of the Table below and used in the manufacture of intermediate products described in column (3) of the said Table received by the said manufacturer for use in or in relation to the manufacture of final products described in the corresponding entry in column (4) of the said Table :

TABLE

S.No.	Description of inputs	Description of intermediate products	Description of final products
(1)	(2)	(3)	(4)
1	All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :-	All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :-	All goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :-
	(i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act;	(i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act;	(i) goods classifiable under any heading of Chapter 24 of the Schedule to the said Act;
	(ii) goods classifiable under heading Nos. 36.05 or 37.06 of the Schedule to the said Act;	(ii) goods classifiable under heading Nos. 36.05 or 37.06 of the Schedule to the said Act;	(ii) goods classifiable under heading Nos. 36.05 or 37.06 of the Schedule to the said Act;
	(iii) goods classifiable under sub-heading Nos. 2710.11, 2710.12, 2710.13 or 2710.19 (except Natural gasoline liquid) of the Schedule to the said Act;	(iii) goods classifiable under sub-heading Nos. 2710.11, 2710.12, 2710.13 or 2710.19 (except Natural gasoline liquid) of the Schedule to the said Act;	(iii) fabrics of cotton or man-made fibres falling within Chapter 52, Chapter 54 or Chapter 55 of the Schedule to the said Act;
	(iv) high speed diesel oil classifiable under heading No. 27.10 of the Schedule to the said Act.	(iv) high speed diesel oil classifiable under heading No. 27.10 of the Schedule to the said Act.	(iv) fabrics of cotton or man-made fibres falling within heading Nos. 58.01, 58.02, 58.06 (other than goods falling within sub-heading No. 5806.20), 60.01 or 60.02 (other than goods falling within sub-heading No. 6002.10) of the Schedule to the Act.

(2) The manufacturer of final products shall take credit under sub-rule (1) only if the intermediate products are manufactured in a factory as a job work in respect of which the exemption contained in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 214/86-Central Excises, dated the 25th March, 1986, has been availed of.

(3) The credit under sub-rule (1) shall be allowed only if the intermediate products received by the manufacturer of the said final products are accompanied by any of the documents as specified under rule 57G evidencing the payment of duty on such inputs.";

(b) for section AAAA, the following section shall be substituted, namely :-

"AAAA. CREDIT OF DUTY PAID ON CAPITAL GOODS USED BY THE MANUFACTURER OF SPECIFIED GOODS

57Q Applicability. - (1) The provisions of this section shall apply to goods (hereafter in this section, referred to as the "final products") described in column (3) of the Table given below and to the goods (hereafter, in this section, referred to as "capital goods"), described in the corresponding entry in column (2) of the said Table, used in the factory of the manufacturer of final products.

TABLE

S.No.	Description of capital goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and used in the factory of the manufacturer	Description of final products
(1)	(2)	(3)
1.	All goods falling under heading Nos. 82.02 to 82.11;	All goods specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :-
2.	All goods falling under chapter 84 (other than internal combustion engines falling under heading No. 84.07 or 84.08 and of a kind used in motor vehicles, compressors falling under heading No. 84.14 and of a kind used in refrigerating and airconditioning appliances and machinery, heading or sub-heading Nos. 84.15, 85.18, 8422.10, 84.24, 84.29 to 84.37, 84.40, 84.50, 84.52, 84.69 to 84.73, 84.76, 84.78, expansion valves and solenoid valves falling under sub-heading No. 8481.10 of a kind used for refrigerating and airconditioning appliances and machinery);	(i) all goods falling under Chapter 24; and(ii) all goods falling under heading Nos. 36.05 or 37.06.
3.	All goods falling under chapter 85 (other than those falling under heading Nos. 85.09 to 85.13, 85.16 to 85.31, 85.39 and 85.40);
4.	All goods falling under heading Nos. 90.11 to 90.13, 90.16, 90.17, 90.22 (other than for medical use), 90.24 to 90.31 and 90.32 (other than of a kind used for refrigeration and airconditioning appliances and machinery);
5.	Components, spares and accessories of the goods specified against S. Nos. 1 to 4 above;
6.	Moulds and dies;
7.	Refractories and refractory materials;
8.	Tubes and pipes and fittings thereof, used in the factory;
9.	Pollution control equipment;
10.	Grinding wheels and the like goods falling under sub-heading No. 6801.10;
11.	Goods falling under heading No. 68.02; and
12.	Lubricating oils, greases, cutting oils and coolants.

(c) computer software, Compact Disc-Read Only Memory (CD-ROM), recorded magnetic tapes, microfilms, microfiches.

(d) Prototypes

(2)(i) The manufacturer of the final products shall be allowed credit of the duty of excise or the additional duty leviable under section 3 of the Customs Tariff Act, 1975 (5 of 1975) (hereinafter referred to as "specified duty") paid on the capital goods.

(ii) The manufacturer availing of the credit may utilise the same for payment of duty of excise payable on the final products manufactured in his factory.

(3) Notwithstanding anything contained in sub-rule (1), the manufacturer of the final products shall be allowed credit of additional duty leviable under section 3 of the Customs Tariff Act, 1975 (5 of 1975) on goods falling under Chapter heading No.98.01 of the first schedule to the said Customs Tariff Act, to the extent of 75% of the said additional duty paid on such goods.

(4) A manufacturer of the final products purchasing capital goods from a unit situated in a Free Trade Zone or from a hundred per cent export-oriented undertaking or from a unit in an Electronic Hardware Technology Park or Software Technology Parks and using them in the manufacture of final products, shall be allowed to take the credit of the specified duty paid on such capital goods only to the extent of duty which is equal to the additional duty leviable on like goods under section 3 of the Customs Tariff Act, 1975 (5 of 1975), equivalent to the duty of excise paid on such capital goods.

(5) The credit of the specified duty on capital goods (other than those capital goods in respect of which credit of duty was allowable under any other rule or notification prior to the 1st day of March, 1997) shall not be allowed if such capital goods were received in the factory before the 1st day of March, 1997.

(6) A manufacturer shall be allowed credit of specified duty paid on capital goods manufactured by him for the manufacture of final products in his factory.

(7) The credit of the specified duty on capital goods [other than those capital goods covered under S.Nos. 5, 7, 10, 11 and 12 of column (2) of the Table below sub-rule (1)] and received in the factory on or after the 1st day of January, 1996, shall not be taken on a date prior to the date on which such capital goods are installed or, as the case may be, used for manufacture of excisable goods, in the factory of the manufacturer as certified by such manufacturer or a person designated by him for this purpose.

(8) Notwithstanding anything contained in sub-rule (7), a manufacturer intending to remove the capital goods from his factory for home consumption or for export, prior to their being installed or used, as the case may be, shall be allowed to take credit on the date on which such capital goods are so removed by him from his factory on payment of the appropriate duty of excise leviable thereon as provided in rule 57S.

57R. Credit of duty not to be allowed or denied or varied in certain circumstances and adjustment in duty credit. -

(1) No credit of the specified duty shall be allowed on capital goods which are used in the manufacture of final products (other than final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year) on which no amount of excise duty is payable for any reason except when the final product is either,

(i) cleared to a unit in a Free Trade Zone; or

(ii) cleared to a hundred per cent export-oriented undertaking; or

(iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Parks;

(2) Credit of the specified duty allowed in respect of any capital goods shall not be denied or varied on the ground that any intermediate products have come into existence during the course of manufacture of the final product and that such intermediate products are, for the time being exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty :

Provided that such intermediate products are specified as final products in column (3) of the Table below sub-rule (1) of rule 57Q.

(3) The credit of the specified duty paid on the capital goods shall be allowed to a manufacturer if the capital goods are acquired by the manufacturer on lease, higher-purchase or loan agreement, from a financing company subject to the following procedure, namely:-

(i) The manufacturer shall file a declaration before the Assistant Commissioner of Central Excise as required under rule 57T;

(ii) The manufacturer availing credit of the specified duty paid on capital goods, who has entered into a financial arrangement,-

(a) for financing the cost of such capital goods excluding the specified duty, shall produce a copy of the invoice referred to in rule 57T, evidencing payment of specified duty along with a copy of the agreement entered into by him with the said financing company; or

(b) for financing the cost of such capital goods including the specified duty, shall produce a certificate from the financing company to the effect that the duty specified on such capital goods has been paid by the said manufacturer to such financing company, prior to payment of first lease rental instalment or first hire-purchase instalment or first instalment of re-payment of loan, as the case may be, along with a copy of the agreement entered into with the said financing company.

(iii) The manufacturer and the financing company shall not claim depreciation under the Income-tax laws on that part of the value of' capital goods which represents the amount of specified duty paid on such capital goods.

(iv) The relevant documents required for the purpose of availing credit of the specified duty paid on such capital goods under rule 57T shall bear the name of the manufacturer along with that of the financing company.

(4) If a manufacturer of final products has taken credit on any capital goods and subsequently it so happens that any refund of the duty paid by the manufacturer of capital goods or importer of capital goods, as the case may be, is allowed to him for any reason, then the user manufacturer shall accordingly adjust the amount of credit in his credit account and if such adjustment is not possible for any reason, the user manufacturer shall pay the amount in cash equal to the amount of refund allowed to the manufacturer or, as the case may be, to importer of capital goods.

(5) If a user manufacturer has taken credit on any capital goods and subsequently it so happens that any additional amount of duty is recovered from the manufacturer of such capital goods or importer of such capital goods, as the case may be, then the user manufacturer shall be allowed an additional credit equal to the amount of such additional amount recovered.

(6) The provisions of sub-rule (5) shall not apply in cases where the duty on capital goods has been short levied or short paid or has been erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any provisions of the Act or the rules made thereunder with the intent to evade payment of duty.

(7) (i) The additional credit as per sub-rule (5) shall be allowed by the proper officer on the basis of a certificate issued by the Superintendent of Central Excise having jurisdiction over the factory, or as the case may be, by the proper officer in the customs area, from where such capital goods were originally cleared.

(ii) The said certificate shall indicate full description of the capital goods, original duty paid and particulars of the documents under which the capital goods were cleared from the factory or, as the case may be, from the customs area and also the differential duty recovered from the manufacturer or the importer.

(8) No credit of the specified duty paid on the capital goods shall be allowed, if the manufacturer, claims depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961), or as revenue expenditure under any other provisions of the said Income-tax Act, in respect of that part of the value of capital goods which represents the amount of specified duty on such capital goods.

57S. Manner of utilisation of the capital goods and the credit allowed in respect of duty paid thereon. - (1) The capital goods in respect of which credit of specified duty has been allowed under rule 57Q may be -

(i) used in the factory of the manufacturer of the final products; or

(ii) removed, after intimating the Assistant Commissioner of Central Excise, having jurisdiction over the factory and after obtaining dated acknowledgement of the same, from the factory for home consumption or for export, on payment of appropriate duty of excise leviable thereon or for export under bond, as if such capital goods have been manufactured in the said factory.

(2) In a case, -

(a) where capital goods are removed without being used from the factory for home consumption, on payment of duty, or for export on payment of duty of excise, such duty of excise shall in no case be less than the amount of credit that has been allowed in respect of such capital goods under rule 57Q;

(b) where capital goods are removed after being used in the factory for home consumption on payment of duty of excise or for export under rebate on payment of duty of excise, such duty of excise shall be calculated by allowing deduction of 2.5 per cent of credit taken for each quarter of a year of use or fraction thereof, from the date of availing credit under rule 57Q; and

(c) where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap.

(3) Credit of the specified duty allowed in respect of any capital goods may be utilised towards payment of duty of excise, -

(i) on any of the final products manufactured in the factory of the manufacturer; or

(ii) on the waste, if any, arising in the course of manufacture of the final products; or

(iii) on the capital goods themselves if such capital goods are removed under sub-rule (1).

(4) No part of the credit of duty allowed, shall be utilised save as provided in sub-rule (3) or, shall be refunded in cash or by cheque.

(5) On an application made by a manufacturer of the final products, the Commissioner may, subject to such conditions and limitations as he may impose, permit a manufacturer having credit in his account in Form RG 23C maintained under rule 57T and lying unutilised, on account of shifting of the factory belonging to the manufacturer, to another site, or on account of change in ownership, or change in the site of a factory resulting from sale, merger, amalgamation or transfer to a joint venture with the specific provision for transfer of liabilities of the old factory, to transfer such unutilised credit to such transferred, sold, merged or amalgamated factory.

(6) Transfer of unutilised credit under sub-rule (5) shall be allowed only if the stock of inputs as such or in process, if any, is also transferred along with the factory to the new site or ownership and that the stock of such inputs is duly accounted for to the satisfaction of the Commissioner.

(7) Notwithstanding anything contained in sub-rule (1), a manufacturer may, after intimating the Assistant Commissioner of Central Excise having jurisdiction over the factory and obtaining dated acknowledgement of the same, remove the capital goods to a place for test, repairs or re-conditioning of such capital goods and return the same to his factory, after the said purpose has been carried out, for further use as such capital goods by following the procedure as may be specified by the Central Board of Excise and Customs or the Commissioner.

(8) Notwithstanding anything contained in sub-rule (1), a manufacturer may, with the permission of the Commissioner and subject to such terms and conditions and limitations as he may impose, remove the moulds and dies, without payment of duty, to a job-worker for the purpose of production of goods on his behalf and according to his specifications.

(9) The Commissioner shall not permit a manufacturer to remove the moulds and dies under sub-rule (8) unless the manufacturer undertakes to bring back the said moulds and dies and the goods so manufactured, within a period of three months from the date of their removal or such extended period as the Commissioner may permit.

(10) In case where moulds and dies removed under sub-rule (8) are not received back within a period of there months from the date of removal of such moulds and dies or within such extended period as the Commissioner may permit, duty shall be paid equivalent to the credit taken on the said moulds and dies.

57T. Procedure to be observed by the manufacturer. - (1) Every manufacturer intending to take credit of the duty paid on the capital goods under rule 57Q shall, before receipt of the capital goods, file a declaration with the Assistant Commissioner of Central Excise having jurisdiction over his factory, indicating therein the particulars of the capital goods, description of the final products manufactured in his factory and such further information as the Assistant Commissioner may require, and shall obtain a dated acknowledgement of the said declaration.

(2) The manufacturer shall also file a declaration in accordance with the provisions of sub-rule (1) of rule 57R to the Assistant Commissioner of Central Excise having jurisdiction over his factory to the effect that such capital goods shall not be used exclusively for production of a final product which is exempt from the whole of the duty of excise leviable thereon (other than a final product which is exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year) or is chargeable to nil rate of duty and also that he shall not claim depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961), or as revenue expenditure under any other provision of the said Income-tax Act, in respect of that part of the value of capital goods which represents the amount of specified duty paid on such capital goods.

(3) In case where a manufacturer was not in a position to make the declarations under sub-rules (1) and (2) and makes the declaration subsequently but ordinarily within a period of one month or in exceptional cases, within a further period not exceeding, in any case, more than another two months from the date of receipt of the said capital goods in the factory, the Assistant Commissioner of Central Excise may, on sufficient cause being shown to him, allow the filing of the declaration.

(4) A manufacturer intending to take credit of the duty paid on the capital goods under rule 57Q shall intimate the particulars regarding full description of the capital goods along with brand name and identification marks or numbers if any, particulars of documents evidencing payment of duty on such capital goods, and any other particulars as the Commissioner may require, to the jurisdictional Superintendent of Central Excise, as soon as may be, on receipt of such capital goods.

(5) In case where a manufacturer has already installed or started using capital goods without filing the intimation under sub-rule (4), the Assistant Commissioner of Central Excise may, on sufficient cause being shown by the manufacturer for not intimating the receipt of the capital goods to the said Superintendent, allow the intimation of receipt of such capital goods to be filed for the purpose of sub-rule (4).

(6) The manufacturer shall be allowed to take the credit of specified duty only if the capital goods are received in the factory premises of the manufacturer under the cover of a document specified under rule 57G evidencing the payment of duty on such capital goods.

(7) The Assistant Commissioner may, on sufficient cause being shown to him, allow the manufacturer to take credit of the specified duty on capital goods, paid by a contractor or job worker who undertakes the job of initial setting up, renovation, modernisation or expansion of the plant on behalf of the manufacturer of final products, subject to such procedure and conditions as may be specified by the Commissioner or the Central Board of Excise and Customs.

(8) If the Assistant Commissioner of Central Excise is satisfied that the duplicate copy of the invoice has been lost in transit, he may allow a manufacturer of final products, to take credit under sub-rule (6) on the basis of the original copy of the invoice.

(9) A manufacturer of the final products shall maintain an account in Parts I and II of Form RG 23C.

(10) A manufacturer of the final products shall, within five days after the close of each month, submit to the Superintendent of Central Excise a return indicating the particulars of the capital goods received during the month and the amount of credit taken along with the original duty paying documents and extracts of Parts I and II of Form RG 23C, and the Superintendent of Central Excise shall after verifying their genuineness, deface such documents and return the same to the manufacturer.

(11) Notwithstanding anything contained in sub-rule (10), the Commissioner may, having regard to the nature, variety and extent of production or manufacture or frequency of removals -

(i) fix in relation to any assessee or class of assessees a period shorter than one month for filing the return as required to be filed under sub-rule (10); or

(ii) permit that the return may be filed by the assessee within a period not exceeding twenty one days after the close of each month.

(12) In the case of a manufacturer availing of any exemption based upon the value or quantity of clearances in a financial year, the provisions of sub-rule (10) shall have effect in that financial year as if for the expression "month" occurring therein, the expression "quarter" were substituted.

57U. Recovery of credit wrongly availed of or utilised in an irregular manner. - (1) Where credit of the specified duty paid on capital goods under rule 57Q has been taken on account of an error, omission or mis-construction, on the part of an officer or a manufacturer, or an assessee, the proper officer may, within six months from the date of filing the return required to be submitted in terms of sub-rule (10) of rule 57T, and where no such return as aforesaid is filed, within six months from the last date on which such return is to be filed under the said rules, serve notice on the manufacturer or the assessee who has taken such credit requiring him to show cause why he should not be disallowed to such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him.

(2) Where the credit under rule 57Q has been taken by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the provisions of sub-rule (1) shall have effect as if for the words 'six months' occurring therein, the words 'five years' were substituted.

Explanation. - Where the service of the notice is stayed by an order of a court of law, the period of such stay shall be excluded from computing the aforesaid period of six months or five years, as the case may be.

(3) The proper officer shall, after considering the representation, if any, made by the manufacturer or the assessee on whom notice is served under sub-rule (1), determine the amount of the credit to be disallowed (not being in excess of the amount specified in the show cause notice) and thereupon such manufacturer or assessee shall pay the amount equivalent to the credit disallowed, if the credit has been utilised, or shall not utilise the credit thus disallowed.

(4) If any capital goods in respect of which credit has been taken are not fully accounted for as having been disposed off in the manner specified in this section, the manufacturer shall, upon a written demand being made by the Assistant Commissioner of Central Excise, pay the duty leviable on such capital goods within three months of the receipt of the notice of demand.

(5) Where a manufacturer or an assessee fails to pay the amount determined under sub-rule (3) or under sub-rule (4), as the case may be, within three months from the date of receipt of notice of demand, he shall pay, in addition to the amount so determined, interest at such rate as may be fixed by the Board under section 11AA of the Act, from the date immediately after the expiry of the said period of three months till the date of payment.

(6) Where the credit of duty paid on capital goods has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts or contravention of any of the provisions of the Act or the rules made thereunder, with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed as determined under sub-rule (3) shall also be liable to pay a penalty equal to the credit so disallowed.

(7) (i) Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or a court of law, the penalty under sub-rule (6) shall be payable on such reduced amount of credit disallowed.

(ii) Where the credit disallowed is increased or further increased by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the penalty shall be payable on such increased or further increased, amount of credit disallowed.

(8) Notwithstanding anything contained in sub-rule (3) or sub-rule (5), where the credit of duty paid on capital goods has been taken wrongly on account of fraud, wilful mis-statement, collusion or suppression of facts or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed, as determined under sub-rule (3), shall also be liable to pay interest at such rate as may be fixed by the Board under section 11AA of the Act from the first day of the month succeeding the month in which the credit was wrongly taken, till the date of payment of such amount.

Explanation. - For the removal of doubts, it is hereby declared that the provisions of this sub-rule shall not apply to cases where the credit disallowed became payable before the 23rd day of July, 1996.

(9) Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals). the Appellate Tribunal or a court of law, the interest under sub-rule (8) shall be payable on such reduced amount of credit disallowed.(10) Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or a court of law, the interest under sub-rule (8) shall be payable on such increased, or further increased, amount of credit disallowed.".