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TMI BlogAN UPDATE ON AMENDMENTS IN CENVAT CREDIT RULES IN 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... AN UPDATE ON AMENDMENTS IN CENVAT CREDIT RULES IN 2014 - By: - Dr. Sanjiv Agarwal - Cenvat Credit - Dated:- 7-4-2014 - - In just 90 days of 2014, Cenvat Credit Rules, 2004 (in short, CCR), which governs the Cenvat Credit of Central Excise Duty and Service Tax in India have already been amended five times in 2014 as on 3 rd April 2014 as summarized herein below : Amendment Notification Date Effective From First Amendment 1/2014-CX (NT) 08.01.2014 08.01.2014 Second Amendment 2/2014-CX (NT) 20.01.2014 20.01.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Third Amendment 5/2014-CE (NT) 24.02.2014 01.04.2014 Fourth Amendment 9/2014-CE (NT) 28.02.2014 01.04.2014 Fifth Amendment 15/2014-CE(NT) 21.03.2014 21.03.2014 Earlier, CCR rules were last amended in December, 2013 only. These amendments have been briefly discussed below: First Amendment Cenvat Credit (First Amendment) Rules, 2014 have been notified vide Notification No. 1/2014-CX (NT) dated 08.01.2014 w.e.f. 08.01.2014 to amend Rule 3 of the Cenvat Credit Rules, 2004 (in short CCR). In Rule 3 , following changes have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken place: explanation to sub rule (5B) has been omitted in sub-rule (5C) , following two explanations have been added: Explanation 1 .- The amount payable under sub-rules (5), (5A), (5B) and (5C), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, where such payment shall be made on or before the 31st day of the month of March. Explanation 2.- If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), (5B) and (5C) , it shall be recovered, in the manner as provided in rule 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for recovery of CENVAT credit wrongly taken and utilised. The afore mentioned changes provide for the reversal of Cenvat Credit taken on input services used for manufacture of goods on which duty is remitted under rule 21 of Central Excise Rules, 2002 . Sub-rule (5C) of Rule 3 of the Cenvat Credit Rules, 2004 has been amended to provide that Cenvat credit taken on input services used in or in relation to the manufacture or production of goods on which payment of duty is remitted under rule 21 of Central Excise Rules, 2002 , shall also be reversed by the assessee. Also, sub rules (5B) and (5C) of Rule 3 of the CCR have been amended to provide that the amount payable by the assessee in respect of removal of input or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods under sub-rules (5), (5A) and (5B) of Rule 3 and reversal of input and input service credit under sub-rule (5C) should be paid latest by the 5th day of the following month except for March, where it should be paid by 31st March. If the amount so payable is not paid by the assessee, it shall be recovered under Rule 14 of the Cenvat Credit Rules, 2004 considering it as Cenvat credit wrongly taken and utilized. Second Amendment Cenvat Credit (Second Amendment) Rules 2014 have been notified vide Notification No. 2/2014-CX(NT) dated 20.01.2014 w.e.f. 20.01.2014 to amend Rule 12 of the CCR . Accordingly, Rule 12 of the Cenvat Credit Rules, 2004 , which provides special dispensation in respect of inputs man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured in factories located in specified areas of North East Region, Kutch District of Gujarat, State of Jammu and Kashmir and State of Sikkim has been amended to include reference to Notification No. 1/2010-C.E., dated 6-2-2010 providing exemption to all goods other than specified in Annexure and cleared from specified units in Jammu and Kashmir. Third Amendment Cenvat credit (Third Amendment) Rules, 2014 have been notified vide Notification No. 5/2014-CE (NT) dated 24.02.2014 w.e.f. 1.4.2014 to amend Rule 7 of CCR in respect of manner of distribution of credit by Input Service Distributor (ISD). The explanation defining 'relevant period' has also been substituted. Accordingly, Service Tax credit attributable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o service used by one or more units exclusively engaged in manufacture of exempted goods or rendition of exempted service shall be barred from distribution of credit. Further, credit of services used wholly by a unit shall be distributed only to that unit. Pro-rata distribution of Service Tax credit shall be based on turnover of units using said service during relevant period to total turnover of all its units operational in current year, during said relevant period. Assessee shall have to ascertain the turnover of all such units to distribute credit. The definition of relevant period has been changed and now, it shall mean - (a) If the assessee has turnover in the financial year preceding to the year during which credit is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distributed for month or quarter, as the case may be, the said financial year; or (b) If the assessee does not have turnover for some or all the units in the preceding financial year, the last quarter for which details of turnover of all the units are available, previous to the month or quarter for which credit is to be distributed. . Thus, the ratio of distribution of cenvat credit to concerned unit for financial year 2014-15 would be turnover of a concerned unit for the financial year 2013-14, as divided by turnover of all the related units for the financial year 2013-14. Effectively, services used by more than one unit exclusively engaged in exempted goods or exempted services shall not be distributed. Further, credit pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to or used only and wholly by a unit shall be distributed to that unit only. Fourth Amendment Cenvat Credit (Fourth Amendment) Rules 2014 have been notified vide Notification No. 9/2014-CE (NT) dated 28.02.2014 w.e.f. 01.04.2014 to amend Rule 9 of CCR . Accordingly, in Rule 9 which deals with documents and accounts, in sub-rule (8), registered importer has also been added and accordingly, he shall also be required to submit within 15 days from the end of each quarter, a prescribed return, in electronic form to the Superintendent of the Central Excise. Fifth Amendment Cenvat Credit (Fifth Amendment) Rules, 2014 have been notified vide Notification No. 15/2014-CE (NT) dated 21.03.2014 w.e.f. 21.03.2014. Rule 12AAA w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich provides for power to impose restrictions in certain type of cases has been substituted by new rule. The new rule provides for measures to prevent misuse of the provisions of Cenvat Credit Rules. Chief Commissioner of Central Excise shall have powers to withdraw the facilities or impose restrictions on a manufacturer, first stage dealer, second stage dealer or an exporter including restriction on utilization of Cenvat credit and suspension of registration of dealer. The new rule contains an explanation which clarifies that the proposals initiated under Notification No. 5/2012-CE(NT) dated 12.03.2012 and pending shall be considered as if initiated in terms of procedure specified under the rule now substituted and shall be decided acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly. The revised procedure has been notified in supersession of Notification No. 5/2012-CE(NT) vide Notification No. 16/2014-CE(NT) dated 21.03.2014 . Procedure for refund under Rule 5B Besides the above amendments, Vide Notification 12/2014-Central Excise (N.T.) dated March 3, 2014, CBEC has notified the procedure for filling refund application by service provider under Rule 5B of the Cenvat Credit Rules 2004 for claiming refund of unutilized Cenvat credit availed on inputs and input services received on and after July 1, 2012 in respect of the following specified services under partial reverse charge mechanism: renting of a motor vehicle designed to carry passengers on non-abated value, to any person who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not engaged in a similar business; supply of manpower for any purpose or security services; or service portion in the execution of works contract The refund claim under rule 5B shall therefore be file in terms of this Notification. - Reply By A Wilson as = Input credit Distribution by Service receiver(Service tax Paid under reverse charge) to Mfg Units Dear Sir, We are a Trading Company having Centralized Service tax Registration at One Place for various premises located across the Country and paying service tax on Freight Payment under GTA. And We have two manufacturing units which are also included in the service tax centralized registration. I wanted to clarify Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er we are eligible to take credit of service tax on freight(inward freight pertaining to Mfg Units) paid under reverse charge? If the service tax credit is eligible for Utilization for Payment of excise duty liability for the Mfg Units, then can we opt for Input service distributor to distribute the credit {of service tax on freight paid under RCM} to the Mfg Units under distribution Invoice or challan? Please give your Inputs on the above. Thanks and Regards, A.Wilson Dated: 17-5-2014 Reply By Dr. Sanjiv Agarwal as = Dear Sir, Service tax paid for inward freight is eligible input service as per the definition of input services defined under rule 2(l) of the Cenvat C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit Rules, 2004. The tax paid under reverse charge mechanism under GTA is eligible for Cenvat credit in the month in which tax is paid / deposited. Utilization of Cenvat credit is governed by rule 3(4) of the Cenvat Credit Rule, 2004 and accordingly, Cenvat credit may be utilized for the payment of any duty of excise on any final product. The manufacturing unit may distribute the Cenvat credit to the other units by taking registration under input service distributor. Regards, Sanjiv Agarwal Dated: 21-5-2014 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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