No time limit for re-credit of CENVAT
Sumit Grover
Vide Circular no. 990/14/2014, dated 119th November, 2014, it has been clarified by CBEC that the the limit of 6 months for availment of CENVAT(applicable from 1st Sep'14) doesn't apply to re-credit scenarios u/r 4(7) 3rd Provisio, 3(5B), 4(5)(a) of CCR'04.
For example, invoice of service provider was dated 1st Sep'14. And CENVAT of service tax thereon was availed on same day itself. However, if amount of invoice has not been paid till 30th Nov'14, the CENVAT is required to be reversed. Subsequently, if payment of invoice is made on 1st May'15, then CENVAT can be re-taken without any hinderance of time limit of 6 months.
Full text of the Notification is as follows :-
Circular No.: 990/14/2014-CX-8
Dated- 19th November, 2014
Sub: Clarification regarding availment of CENVAT credit after six months-reg.
Attention is invited to the Notification of the Government of India in the Ministry of Finance, Department of Revenue No. 21/2014-CE (NT) dated 11.07.2014, vide which, inter alia, amendment was made in Rule 4(1) and 4(7) of CENVAT Credit Rules, 2004 (CCR, 2004) to prescribe that manufacturer or output service provider shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of Rule 9.
2. Concerns have been expressed by trade that in view of above changes, the re-credit taken in following three situations may be hit by the time limit of six months prescribed:
i. 3rd proviso to Rule 4(7) of CCR, 2004 prescribes that if the payment of value of input service and service tax payable is not made within three months of date of invoice, bill or challan, then the CENVAT Credit availed is required to be paid back by the manufacturer or service provider. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back can be re-credited.
ii. According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to 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 paid can be re-credited in the account.
iii. Rule 4(5)(a) of CCR, 2004 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.
3. The matter has been examined. The purpose of the amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 is to ensure that after the issue of a document under sub-rule (1) of Rule 9, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B) or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules
4. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board. Hindi version follows.
F. No. 267/72/2013-CX.8 (Pt)
(Shankar Prasad Sarma)
Reversed Cenvat credit can be re-taken even after six months
CA Pratik Anand
The CBEC has issued circular No. 990/14/2014-CX-8 dt. 19/11/2014, wherein it has clarified that the cenvat reversed or amount paid for reversal in respect of cenvat credit wrongly availed where the conditions relating to availment of cenvat credit were not fulfilled, can again be claimed as input credit on the fulfilment of prescribed conditions even after six months from the date of issue of a document (i.e invoice challan etc) prescribed under rule 9(1) of Cenvat Credit Rules'2004.
The CBEC has clarified that the limit of availing cenvat credit within six months from date of the issue of document under rule 9(1) is applicable where cenvat credit is taken for the first time. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in the Cenvat Credit Rules'2004.
The situations wherein this clarification is applicable is as follows:
1) Newly inserted third proviso to Rule 4(7) provides that if the value of input service as well as service tax thereon is not paid within a period of three months from the date of the invoice etc., the manufacturer or the service provider who has taken credit on such input service has to make payment of an amount equal to the CENVAT Credit availed. It is further clarified that said payment of reversal may be made by cash or through debiting Cenvat credit. This proviso does not apply to cases where 100% of the service tax is to be paid by the recipient.
Therefore if a manufacturer or service provider could not pay the value of input service availed as well as the service tax thereon within 3 months of raising of invoice then the CCR has to be reversed. The CCR can be re-taken on payment of the amount of service as well as the service tax thereon even after expiry of six months from the date of invoice.
2) According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to 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 paid can be re-credited in the account i.e cenvat credit can be re-taken even after expiry of six months from the date of invoice for the purchase of input or the capital good.
3) Rule 4(5)(a) of CCR, 2004 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 cenvat credit account even though the goods are received back from the job-worker after expiry of six months from the date of original invoice.
Hope you find the above information relevant and useful in your daily practice.
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Availment of Cenvat credit on Inputs/ Input Services after six months
CBEC clarification regarding availment of Cenvat credit on Inputs/ Input Services after six months
Background: The CBEC vide Notification No. 21/2014-CE (NT), dated July 11, 2014 (Applicable w.e.f September 1, 2014) [Notification No. 21], has amended Rule 4(1) and Rule 4(7) of the Cenvat Credit Rules, 2004 (the Credit Rules) to fix a time limit of six months from the date of issuance of any of the documents specified in Rule 9(1) thereof, for availment of the Cenvat Credit on Inputs and Input Services.
Clarification by the CBEC: The CBEC vide Circular No: 990/14/2014-CX-8 dated. November 19, 2014 ("the Circular") has clarified that the purpose of the amendment made by Notification No. 21 is to ensure that after the issuance of a document under Rule 9(1) of the Credit Rules, Cenvat credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. The relevant text of the Circular is reproduced here in below:
"2. Concerns have been expressed by trade that in view of above changes, the re-credit taken in following three situations may be hit by the time limit of six months prescribed:
i. 3rd proviso to Rule 4(7) of CCR, 2004 prescribes that if the payment of value of input service and service tax payable is not made within three months of date of invoice, bill or challan, then the CENVAT Credit availed is required to be paid back by the manufacturer or service provider. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back can be re-credited.
ii. According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to 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 paid can be re-credited in the account.
iii. Rule 4(5)(a) of CCR, 2004 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.
3. The matter has been examined. The purpose of the amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 is to ensure that after the issue of a document under sub-rule (1) of Rule 9, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B) or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules."
Other Open issues – Not clarified:
Even though the CBEC has clarified non-applicability of six months time limit while availing re-credit in terms of the Credit Rules but, there are certain other issues still exists in this regard, which requires immediate attention of the Board:
(i) SSI Unit crossing Exemption limit: In terms of Rule 3(2) of the Credit Rules, a manufacturer or producer of final products is allowed to take Cenvat credit of the duty paid on inputs lying in stock or in process or inputs contained in the final products lying in stock, on the date on which any goods manufactured by the said manufacturer or producer cease to be exempted goods or any goods become excisable.
Issue: Where a manufacturer availing SSI exemption, crosses the exemption limit, whether transitional credit is available if the invoices under which the above category of inputs were purchased are beyond six months from the date of taking Cenvat credit?
(ii) Cenvat credit on goods received after re-conditioning, repairs, etc.: Under Rule 16 of the Central Excise Rules, 2002, where any goods on which duty had been paid at the time of removal are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take Cenvat credit of the duty paid as if the goods are received as inputs under the Credit Rules and utilize the Cenvat credit according to the Credit Rules.
Issue: Whether the newly added proviso to Rule 4(1) of the Credit Rules, which talks about inputs, would apply to Cenvat credit taken on finished goods received by the manufacturer in the factory beyond 6 moths of its removal from the factory?
(iii) Invoices issued prior to September 1, 2014: Notification No. 21 amending Rule 4(1) and Rule 4(7) of the Credit Rules is effective from September 1, 2014.
Issue: Whether the time limit of six months prescribed for availing Cenvat credit would apply to the invoices issued prior to September 1, 2014?
We request esteemed readers to write back to us for any other related issue(s) pertaining to time limit of 6 months for availing Cenvat credit on Inputs and Input Services in the light of Notification No. 21 read with the Circular issued by the CBEC.
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Availment of Cenvat credit on Inputs/ Input Services aft... CBEC clarification regarding availment of Cenvat credit on Inputs/ Input Services after six months Background: The CBEC vide Notification No. 21/2014-C... | |||||||
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