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• Importance - Cenvat Credit

• Relevant Amendments

• Changes - FI Act (2) – 2014

• Case Laws – Issues and Resolutions

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• Reduces - Cascading effect - IDT.

• Important - Every business - Manufacturing, Trading,

or Services.

• Optimization of cash outflow of the businesses.

Payment of Duty :

• Debit - Cenvat Credit

• On or before 5th - [except March - 31st – Due date] when,

a. Inputs / Capital goods - Taken Cenvat Credit – Goods

removed without use, or

b. Capital goods – Taken Cenvat Credit - Removed after

being used and;

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– Amount Payable = Credit taken reduced by the

percentage [Rule 3(5A)] , or

c. Value written off partially / fully - Where credit is

taken- Ingersoll Rand

d. Where duty is remitted- unforeseen causes- fire

• Payment [Failure] :

Interest applicable from the date of non-payment.

(Notification 1/2014-CX(NT) dtd 20.1.2014)

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Service Tax Credit:

• Units engaged [exclusively]- manufacture of exempted

goods or rendition of exempted service - Barred from

distribution of credit.

• Credit of services [used wholly] - Distributed only to that

unit.

• Service Tax Credit [Pro-rata distribution] based on:

Turnover [Relevant Period] to Total Turnover

[Relevant Period – Current Year]

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• Relevant year means -

– Has turnover – Preceding to the financial year during

which credit is to be distributed.

– No turnover - Last quarter – Where details are

available.

(Notification No. 5/2014-CE (NT) dated 24.02.2014)

Importer rgtd. [CE] – Required to submit:

a. Prescribed return

b. Electronic form

c. Superintendent of CE

d. Along with first stage and second stage dealers

(Notification No. 9/2014-CE (NT) dated 28.02.2014)

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Refund Application - Filing [Procedure]:

• Payment of service tax [JC].

• Refund - unutilized Cenvat Credit availed – on

receipt of inputs and input services [on and after

01.07.2012].

JC - Services :

a. Renting of a motor vehicle - on non-abated

value

b. Supply of manpower

c. Execution of works contract

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• Definition - ‘Place of removal’ : [Rule 2]

Additional clause ‘qa’ inserted. Place of removal now

means-

– a factory / any other place or premises of production /

excisable goods [mftred];

– a depot, premises of a consignment agent / any

other place or premises – Clearance of goods

from the factory from where it is removed – To be

sold.

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Cenvat Credit within 6 m of invoice / bill -

By the eligible party. (i.e. manufacturer,

service provider & service receiver).

Not taken – 1st September 14- Credit

would lapse & become ineligible.

Credit allowed - For service tax paid / payable [reverse

charge] in the following cases :

-> After service tax is paid – RC.

-> Payment to service provider along with service

tax – JC .

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c. Value of service and service tax - Not paid [partial

reverse charge] within three months – :

Amount equal to Cenvat Credit taken shall be

payable.

• Payment [foreign currency] - Received within one year

from the last date of extended period allowed by RBI

[payment received after the extended period] - Not an

exempted service and availability of Cenvat Credit.

• Cenvat Credit taken [on or before 10.07.2014] – By LTU

through one of it’s registered manufacturing premises

– Can be transferred.

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Cenvat Credit eligible for cement or steel used in

construction of storage tank as well as pollution control

equipment?

Department plea was that the same is used in

manufacture of immovable property/non-excisable

items, and hence not entitled to credit, is rejected.

Comm. v. SLR Steels Limited - 2014 (302) E.L.T. A29

(Kar.)

Cenvat credit on Capital goods received by job worker

under leave and license agreement and not owned?

Credit is allowed. Intimation under Rule 57S(1) of CE

Rules is necessary.

CCE V Ilgin Automotive (P) Ltd.- 2014 (299) E.L.T. 129

(Mad.)

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Determination of Cenvat credit eligibility on Capital

goods – on usage or on receipt?

Eligibility to be determined when goods received by

manufacturer and not on subsequent usage of the same

for manufacturing dutiable or exempted goods.

Surya Roshni Ltd. v. Comm. - 2013 (298) E.L.T. A24 (M.P.)

Refund claim to be filed for wrong reversal of credit

earlier and book adjustments are not allowed?

Filing of refund claim is not required for Suomotu

credit of Cenvat reversed earlier. Account entry

reversal do not result in outflow of funds.

ICMC Corporation Ltd. V Cestat 2014 (302) E.L.T. 45

(Mad.)

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Principal Manufacturer cannot take credit for duty paid

by the Job worker?

Principal-manufacturer cannot be denied to take credit of

duty that was actually paid by the Job worker (without

availing exemption under Not. 214/86)

Comm. v. Aries Dyechem Industries - 2014 (299) E.L.T.

A88 (Guj.)

Credit available or not on Duty paid on rejected goods?

On return of goods, Rule 16 of CER, 2002 allows credit of

duty “paid” at the time of clearance of goods and not

duty “payable” at the time of receipt of goods.

Comm. v. Divya Pharma - 2013 (292) E.L.T. A27 (Guj.)

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Rebate on inputs cleared as such for export, credit is

also reversed?

Compliant to export procedures. Incentive oriented

beneficial schemes intended to boost export and purport

of incentive is not defeated. Rebate allowed.

Comm. v. Divya Pharma - 2013 (292) E.L.T. A27 (Guj.)

Credit allowed on paint for walls?

Incidental and ancillary requirements for the completion

of final product also falls within the definition of

manufacture and such materials are used in making the

dust free hall – Credit allowed.

Comm. of Cus.& C. ex., V SamtelColor Ltd. 2013 (293) E.L.T.

501 (All.)

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Credit not available on inputs destroyed in fire

accidents?

Inputs issued to production were destroyed. Credit is

admissible.

Comm. v. Indchem.Electronics - 2003 (157) E.L.T. A206

(S.C.)

Interest payable on Cenvat credit as per Section 11AC of

CE Act?

Section 11AC of the Act, apply to the duty only and not

to the CENVAT credit.

Comm. v. Pro-Sun Ferro Alloys Metal Castings (P) Ltd. -

2013 (293) E.L.T. A57 (Bom.)

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“Opportunity is missed by most because it is

dressed in overalls and looks like work.”

- Thomas Alva Edison

OPPORTUNITY