9911796707
TMI BlogTIME LIMIT FOR TAKING CENVAT CREDITX X X X Extracts X X X X X X X X Extracts X X X X ..... TIME LIMIT FOR TAKING CENVAT CREDIT - By: - Mr. M. GOVINDARAJAN - Cenvat Credit - Dated:- 23-11-2015 - - CENVAT credit may be taken and utilized on inputs, capital goods and input services. Rule 4 provides for the conditions for taking the credit including the time limit. In this article the time limit for taking CENVAT credit for the above three is to be discussed. Inputs Rule 4 (1) of CENVAT Credit Rules, 2004 ( Rules for short) provides that the CENVAT credit in respect of inputs may be taken- immediately on receipt of inputs- in the factory of the manufacturer; or in the premises of the provider of output service; or in the premises of job worker in case the goods are sent directly to the job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worker on the direction of the manufacturer or the provider of output service; (with effect from 01.03.2015) in respect of final products, namely, articles of jewellery or other articles of precious metals falling under heading 7113 or 7114 as the case may be of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker; The other condition for taking CENVAT credit on inputs is that the manufacturer or the provider of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utput service shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub- rule (1) of rule 9 . This condition is with effect from 01.03.2015. Before that the limitation is six month from 01.09.2014 to 28.02.2015. Capital goods Rule 4(2) provides for the taking of credit on excise duty paid on capital goods. The CENVAT credit in respect of capital goods received- in a factory; or in the premises of the provider of output service; or outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory or in the premises of the job worker, in case capital goods are sent directly to the job worker on the direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the manufacturer or the provider of output service, as the case may be, at any point of time in a given financial year shall be taken only for an amount not exceeding 50% of the duty paid on such capital goods in the same financial year. The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Excise Tariff Act, are in the possession of the manufacturer of final products, or provider of output service in such subsequent years. The CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year. The CENVAT credit of the additional duty leviable under Section 3(5) of the Customs Tariff Act , in respect of capital goods shall be allowed immediately on receipt of the capital goods in the factory of a manufacturer. Where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year. Input Services Rule 4(7) provides for taking credit of service tax in respect of input services. The CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 is received. If the credit is availed on or after the day on which the invoice is received, the payment in respect of the invoice shall be paid within three months from the date of invoice. Otherwise the credit already taken is to be reversed. The manufacturer or the provider of output service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub-rule (1) of rule 9 . This condition is applicable with effect from 01.03.2015. Before that the time limit is six months from 01.09.2014 to 28.02.2015. Before that there is no time limit prescribed for taking the credit. Input Service Distributor Rule 9(1)(g) provides that the CENVAT credit may be taken on an invoice, bill, challan issued by an Input Service Distributor under Rule 4A of Service Tax Rules, 1994. CENVAT credit on such invoice may be taken within one year from the date of invoice of the Input Service Distributor. Time limit for Re-credit The following are the situations in which CENVAT credit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to be reversed and credit can be re-taken: Rule 4(7) provides that the credit on input services shall be allowed on receipt of the invoice, bill, challan. But if the bill is not paid within three months the credit taken is to be reversed. Subsequently, when such payments of value input service and service tax is made, the amount so paid back can be re-credited; Rule 3(5B) provides that if the value of any input or capital goods before putting use on which CENVAT credit has been taken, is written off or such provisions made in Books of Account, the manufacturer or service provider is required to pay an amount equal to credit so taken. However when the inputs or capital goods are subsequently used, the amount so pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id can be re-credited in the account. Rule 4(5)(a) prescribes that in case inputs sent to job worker are not received back within 180 days, the manufacturer or service provider is required to pay an amount equal to credit taken on such inputs in the first instance. However, when the inputs are subsequently received back from job worker, the amount so paid can be re-credited in the account. The Circular No. 990/14/2014-CX-8, dated 19.11.2014 clarifies that the purpose of fixing the limitation for taking credit is to ensure that after issue of a document under Rule 9(1), credit is taken for the time within one year of the issue of the document. Once this condition is met, the limitation of one year has no further application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore in the above three situations, limitation of one year would apply when the credit is taken for the time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in the rules. Input services under Reverse charge mechanism In respect of input service where whole or part of the service tax is liable to be paid by the recipient of service, credit of service tax payable by the service recipient shall be allowed after such service tax is paid. Author s view is that the limitation of one year will not be applicable to RCM. - Reply By Chirag Jain as = Nice Article Sir, As per your article, If the credit is availed on or after the day on which the invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is received, the payment in respect of the invoice shall be paid within three months from the date of invoice. Otherwise the credit already taken is to be reversed. My query is for Input Service: If the credit is availed on or after the day on which the invoice is received, the payment in respect of the invoice will be paid after three months from the date of invoice . Can credit is allowed on date of payment? which is after three months from the date of invoice. Chirag Jain Dated: 24-11-2015 Reply By MARIAPPAN GOVINDARAJAN as = Dear Sir, If credit is taken after the issue of invoice and the bill is paid after three months the credit taken is reversed immediately on the expiry of three months. After making payment you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can take re-credit for the same for which the limitation will not be applicable. Dated: 24-11-2015 Reply By SARAVANAM Ramasamy as = Dear Sir, Can we take full Credit on imported capital goods in the subsequent year ? ( here the goods received by the unit on Jan 2015 and 50% of credit not taken in the first year ie..2014- 2015 ) Is the cenvat credit is eligible for the Custom Duty paid by using Duty Credit Scrips issued under Vishesh Krishi and Gram Udyog Yojana ? Please i need your clarification. Regards, R. Saravanam Dated: 24-11-2015 Reply By MARIAPPAN GOVINDARAJAN as = Dear Sir, If 50% of credit on excise duty paid on capital goods is not taken in the subsequent financial year 100% may be taken. There is no bar in it. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second point I will analyze and revert. I also expect the views of the experts in the second point. Dated: 24-11-2015 Reply By Vijayakumar J as = Dear sir I have a doubt whether this one year limit is applicable for the capital goods category also. Dated: 25-11-2015 Reply By MARIAPPAN GOVINDARAJAN as = Dear Sir, One year time limit is not applicable to capital goods. Dated: 25-11-2015 Reply By Ganeshan Kalyani as = In my view if 50% credit is not taken in 2014-15 then you will have to take 50% credit in 2015-16 and balance should be taken in 2016-17. Dated: 30-11-2015 Reply By MARIAPPAN GOVINDARAJAN as = Dear Sir, If 50% of credit on capital goods is taken in the year 2014-15, then the entire 100% of credit may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken from 2015-16. There is no time limit for this. You may take even in the year 2018-19. Dated: 30-11-2015 Reply By SARAVANAM Ramasamy as = Dear Sirs, Thank u so much for the clarification of my first doubt. Pls try to get clarify my second question . Is the cenvat credit is eligible for the Custom Duty paid by using Duty Credit Scrips issued under Vishesh Krishi and Gram Udyog Yojana ? Dated: 1-12-2015 Reply By SAKTHIVEL PONNUSWAMY as = Dear Sir, Usually we are availing cenvat credit on sales returned based on our own invoice or invoice of the customer as per Rule 16 of the central excise Rule . Is the time limit of one year applicable for this transactions. Thanks Regards SAKTHIVEL PONNUSAMY Dated: 6-12-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 Reply By MARIAPPAN GOVINDARAJAN as = Yes, it will be applicable. Dated: 7-12-2015 Reply By Nitesh Sharma as = Sir, I want to know what if a purchase bill is recorded after 2 months from the date of invoice?? How will I book that entry and on what date?? Can I take Cenvat Credit on that?? Invoice date is 24/05/2016 Recorded date is 01/08/2016. Dated: 2-8-2016 Reply By HImanshu Singh as = Dear Sir, I would Like to ask a query relating to CCR on Captal Goods: 1. A Factory Purchased the duty paid capital goods during the period when it was availing an exemption, due to exemption factory did not availed the CCR on capital goods as its final products were Exempted. Subsequently Govt. withdrew the said exemption and all the final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts become duitable, in that case whether factory can avail the CCR on Capital Goods which were purchased during the period of exemptions as the capital goods are continued to be used in the factory? If Yes then what will be time limit for the same? 2. A factory Manufacturing Taxable and exempted both types of final Products, it purchased a capital goods which is commonly used in manufacturing of both taxable and exempted Products . Whether CCR can be availed and utilized for payment of Excise duty on Dutitable Products? Please give your valuable comments on the same. Dated: 10-9-2016 Reply By MARIAPPAN GOVINDARAJAN as = In respect of your first query there is no express provision in the Rules. However you may get advice from your ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdictional Superintendent in this regard. In respect of your second query you may apply Rule 6 of CENVAT Credit Rules. Dated: 10-9-2016 Reply By Dilip Sonagra as = Dear Sir, In last para of this article, you have concluded that time limit of 1 year for availing cenvat credit will not be applicable in case of services covered under reverse charge mechanism. Can you please explain logic behind this interpretation because plain reading of Rule 4(7) vis-a-vis Rule 9(1) provide that in case of RCM, credit can be taken withing 1 year from the date of Challan. Dated: 4-10-2016 Reply By Vinod Sharma as = We are availing area base exemption. Purchase some capital goods for which Ist year during Exemption. Next year plant bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome excisable. Can we take 50% credit during IInd year when plant become excisable. Dated: 21-10-2016 Reply By MARIAPPAN GOVINDARAJAN as = Dear Vinod Sir, In my view it is eligible. Dated: 21-10-2016 Reply By MARIAPPAN GOVINDARAJAN as = Dear Dilip Sir, In respect of reverse charge mechanism no invoice is issued for making payment. On receipt of invoice the service recipient himself calculate the tax payable and paid the same to the credit of the Government. There is no stipulation for invoice in Rule 9 . As such my view that there is no time limit for taking credit on RCM payments. The Central ExciseAuthorities, in our jurisdiction, accepted this plea. Dated: 21-10-2016 - Scholarly articles for knowledge sharing authors exper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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
|
