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TMI BlogCentral Excise (Amendment) Rules, 1997X X X X Extracts X X X X X X X X Extracts X X X X ..... ded 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia 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 notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery, 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 unutil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner 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 ..... 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