cenvat

CENVAT Credit Rules, 2004

Topics

Definitions (Rule-2) CENVAT Credit(Rule-3) Conditions for availing CENVAT Credit(Rule-4) Refund of CENVAT Credit(Rule-5 & 5A) Obligations of manufacturer of dutiable and

exempted goods(Rule-6) Storage of input outside the factory(Rule-8) Documents and accounts(Rule-9) Information relating to principal input(Rule-9A) Procedures and facilities for LTU(Rule-12A) Recovery of CENVAT credit wrongly taken(Rule-14) Confiscation and Penalty (Rule-15) General Penalty(Rule-15A)

Definitions(Rule-2)

Rule 2(k) Input Rule 2(l) Input Service Rule 2(a) Capital Goods

Definitions(Rule-2)Rule-2(k) input

All goods except LDO, HSDO and petrol used in or in relation to the manufacture of final product whether directly or indirectly and whether contained in the final product or not

and includes lubricating oils, greases, cutting oils, coolants accessories of final products cleared alongwith final product goods used as paints goods used as packing material goods used as fuel goods used for generation of electricity or steam used in or

in relation to manufacture of final products or for any other purpose, within factory of production

Contd.


All goods except LDO, HSDO, petrol and motor vehicles used for providing output service

Explanation 1 The LDO, HSDO and petrol shall not be treated as an

input for any purpose whatsoever

Explanation 2 Inputs includes goods used in manufacture of capital

goods, which are further used in the factory of the manufacturer but shall not include cement, angles, channels, CTD, TMT and other items for construction of factory shed, building or laying of foundation or making structure for support of capital goods.

Contd.


Inputs specifically eligible Lubricating oils, greases, cutting oils, coolants (Earlier

these were covered in CG) Accessories of final product provided they are cleared

along with final product Paints: Thinners eligible, Painting for machinery and

pipelines eligible Packing Material Fuel: anything which is burnt and used as source of

heat and power is fuel. E.g. furnace oil, However no credit on LDO, HSDO and petrol

Goods used for generation of electricity or steam for manufacture of final products or any other purpose

Contd.


SC in case of MSIL vs CCE All the three parts of definition, namely specific,

inclusive and place of use to be satisfied before an input become eligible input

Mere fact that items a packing material whose value included in assessable value of final product not entitle manufacture to take credit

Contd.


Inputs used for QA purposes

If the test is an integral part of the manufacture, then credit should be allowed

Essential and mandatory pre-requisite for marketability of the product

Covered under incidental or ancillary processes mentioned in definition of manufacture

Contd.


Inputs Destroyed before use/pilfered from store room

Must be USED

Have to reverse credit if already taken

Contd.


Shortage of input

If shortage/loss is due to natural causes like evaporation during transit/storage or loss due to handling then CENVAT available even in respect of lost quantity

If any other reason then CENVAT reversal

Contd.


Input becomes waste and is sold as scrap CENVAT allowed even if input become

waste during manufacturing process and sold as scrap even if such waste is exempted or chargeable with nil rate of duty

Same rule applicable if input is contained in waste/refuse/by-product

Contd.


Final product cleared in durable and returnable packing

CENVAT allowed as definition includes packing material

Contd.


Inputs used as consumables Inputs used for marking on packing Inputs used for cleaning machinery Grinding media - steel balls - inputs or

capital goods? Filter cloth or media Thermic fluid used for heating reactor

Contd.


Are goods used in ETP eligible for credit as ‘inputs’? The Hon’ble Supreme Court has held that

effluent treatment is integral to manufacture

Indian Farmer Fertiliser Co. Vs CCE - 1996(86)ELT 177(SC)

Followed by Madras High Court Siv Ind Ltd Vs CCE 2001(43)RLT523(Mad)

Contra - earlier decision in Mettur Chemicals Contd.


Explanation 2

inputs includes goods used for manufacture of capital goods which are used in a factory

Steel sheets, any items or machinery used in the manufacture of capital goods inside a factory to be treated as ‘inputs’


Questions?? RM damage during storage in RMG due to

rain Batch become NCIP due to wrong addition

of material LPG for generation of steam in boiler Steel plates and strips used in manufacture

of storage tank for liquid material Steel plates and strips used for

construction of bridge between RH and SBU

Definitions(Rule-2)Rule-2(l) input service

Any service used by provider of taxable service for

providing an output service used by manufacturer

whether directly or indirectly in or in relation to the manufacture of final products and clearance of final products upto the place of removal

Contd.


and includes Service used in relation to repair etc of

factory or premises of output service provider or office related thereto,

Advertisement, sales promotion, storage upto place of removal, procurement of inputs, Activities relating to business, inward transportation outward transportation upto the place of

removal Contd.


As per section 4(3)(c) of CE Act, Place of Removal means

a factory or any other place a warehouse or any other place wherein excisable

goods have been permitted to be deposited without payment of duty

a depot, premises of a consignment agent or any other place from where the excisable goods are to be sold after their clearance

from where such goods are removed.

Contd.


CENVAT credit of service tax paid on outward freight Credit allowed upto the place of removal All dispatches to depot/RDC – Credit

allowed Export - ????? Other Plant Dispatches - ????? Sample Dispatches - ?????

Contd.


CENVAT credit of service tax paid on Mobile Phones Credit allowed provided used for providing output service

or in or in relation to manufacture of FG

Contd.


Payment of Service Tax on GTA through using CENVAT credit ???? payment of service tax on GTA CANNOT be

made through using CENVAT credit. as consignor/consignee is neither output

service provider nor such service is output service for them

Payment by Cash and then take credit


Questions Service tax paid on legal services by HO Service tax paid on TV commercials by HO Service tax paid on TV commercials by

plant Service tax paid on repair of RDC Service tax paid on canteen services Service tax paid on outward freight for

despatch to depot

Definitions(Rule-2)Rule-2(a) capital goods

(A) The following goods namely, all goods of First Schedule to the Tariff Act falling under:

Chapter-82(tools, implements, spoons and forks of base metal and parts thereof of base metal)

Chapter-84(machinery and mechanical appliances and their parts) Chapter-85(electrical and electronic machinery and equipment) Chapter-90(optical, photographic and surgical equipments) Heading-6805(natural or artificial abrasive powder on a base of

textile material) Heading-6804(grinding wheels and the like)

pollution control equipments components, spares and accessories of goods specified in above

two points moulds and dies, jigs and fixtures refractories and refractory materials tubes and pipes and fittings thereof storage tankused in the factory but does not include any equipment or appliances

used in an office for providing output service Contd.


(B) Motor vehicles registered in the name of provider of output service for providing following taxable services:

courier tour operator rent-a-cab operator pandal/shamiana cargo handling goods transport outdoor caterer

Contd.


What is meant by ‘factory’ ? Will items used in a canteen within a factory

become eligible for credit ? Say dish washing machines (CSH 8422.10) in canteen?

Items used for the comfort of workmen on the shop-floor eligible? Say fans used on the packing line for workmen?

Can an air-conditioner used inside a canteen located within the factory premises be eligible for credit?

Are capital goods used in R&D but within a registered factory premises eligible for credit?

Contd.


Used in factory........ In order to qualify as capital goods, the

goods need not be used for producing the FG or used in the process of any goods for manufacture of FG or used for bringing about any change in any substance for manufacture of FG. The only requirement is that the said foods should be used in the factory of the manufacturer of FG. CCEx v. Jawahar Mills Ltd.[2001] 132 ELT 3 (SC)

Contd.


Does not include any equipment or appliances used in an office What is ‘office’? What if the AC is installed in an office cabin

in the manufacturing area – it is used to cool the manufacturing area and also the cabin?

Contd.


Is duty payable on capital goods produced and used captively? Exemption for capital goods produced and used

captively under notifn. 67/95 Does this exemption cover all goods?


Questions Equipment used in R&D centre within plant Plastic crates used for keeping sample bottles Welding electrodes used for repair Computers Air conditioners

CENVAT Credit(Rule-3)Rule-3(1) duties on which CENVAT is allowed

CENVAT credit of following duties/taxes paid on any input/capitalgoods received in factory or input service received by themanufacturer/provider of output service shall be allowed:

BED SED Additional duty of Excise (under ADE(TTA)) Additional duty of Excise (under ADE(GSI)) National Calamity Contingent Duty E Cess on excisable goods SHE Cess on excisable goods Additional Duty of Customs Additional Duty u/s.3(5) of Customs Tariff Act Additional Duty of Excise (ADET) Service Tax E Cess on taxable services SHE Cess on taxable services Additional Duty of excise u/s.85 of the Finance Act, 2005 Contd.

CENVAT Credit(Rule-3)Rule-3(1) duties on which CENVAT is allowed

Credit on Duty PAID Even if the supplier of inputs has paid duty

in excess of that payable thereon, the assessee is eligible to avail CENVAT credit of the TOTAL sum.

The credit cannot be denied in the hands of the assessee without, in the first instance, disturbing the assessment of the supplier of inputs.

Contd.

CENVAT Credit(Rule-3)Rule-3(2) FG becomes excisable after receipt of input

CENVAT credit shall be allowed of the duty paid on inputs

lying in stock in process inputs contained in FG lying in stock

on the date on which any goods manufactured by the said manufacturer

cease to be exempted any goods becomes excisable

Contd.


What of CENVAT credit of Capital Goods in such case ????

Eligibility of CENVAT credit on CG should be determined at the time when CG are received by manufacturer.

Subsequent becoming of goods as dutiable or the manufacturer putting CG to other use could not revive the question of admissibility of CENVAT credit.

Held in Surya Roshni Ltd. v. CCEx[2003] ELT A273 (SC)

Contd.


What if input/CG used for manufacture of exempted intermediate goods , which in turn used to manufacture FG which is dutiable?

Credit can be availed CCEx. v. Hindustan Sanitary Ware [2002] 145 ELT 3 (SC)

Contd.


What if input originally entitled to CENVAT subsequently became ineligible for CENVAT?

CENVAT credit lawfully earned could be utilized even after withdrawal of CENVAT for that input

Dhar Cement Ltd. v. CCEx. [1996] (Tri.)

Contd.

CENVAT Credit(Rule-3)Rule-3 CENVAT credit if input price reduced after clearance

APL purchased pigments (Assessable Value=10 Lakhs, Excise Duty=10%, No EC or SEHC) from Ciba Ltd and took the CENVAT credit admissible under the law. Thereafter, APL paid a lumpsum of Rs.10.5 Lakhs only to Ciba Ltd in full and final settlement of the said purchase.

State- What is amount of duty payable at the time of clearance of the

goods? 1 Lakh ( 10 Lakh x 10% )

Whether Ciba Ltd can file refund claim for the excess duty, if any, paid by it?

No, AV u/s.4 or 4A is 10 Lakhs so duty is 1 Lakh Whether APL is required to reverse any amount of CENVAT credit

taken by it? No

What would be answer, if assessable value of Rs.10 Lakhs had been provisionally assessed and subsequently, the value inclusive of duty is fixed at 10.5 Lakhs, as paid by APL. Ignore Interest.

Final Liability Rs.95455, Refund = 4545 What if refund not granted?

Take Credit of 1 Lakh

CENVAT Credit(Rule-3)Rule-3(3) service becomes taxable after receipt of input

CENVAT credit shall be allowed of the duty paid on inputs

lying in stock on the date on which any service provided

by output service provider ceases to be exempted service becomes taxable

Contd.

CENVAT Credit(Rule-3)Rule-3(4) utilization of CENVAT credit

CENVAT credit may be utilized for payment of any duty of excise on any FG an amount equal to CENVAT credit taken on inputs

if such inputs are removed as such or after being partially processed

an amount equal to CENVAT credit taken on CGs if such CGs are removed as such

an amount u/r.16(2) of CE Rules,2002(FG Sales Return subsequent payment of duty)

service tax on any output service

Contd.


Can CENVAT credit be used for payment of interest, penalty and fine ????

Contd.


Restriction on utilization in certain cases credit available upto last day of month can be

utilized for payment of duty for that month Payment of NCCD, Additional duty of excise u/s.85

cannot be made by CENVAT credit on other than NCCD and AED

Contd.

CENVAT Credit(Rule-3)Rule-3(5) input and CG removed as such

When input or CG are removed as such from factory manufacturer shall PAY an amount equal to

CENVAT credit availed on such input or CG and such removal is made under the cover of invoice

if CG are removed after being used pay an amount equal to CENVAT credit availed on such CG as reduced by 2.5% for each quarter of a year from date of taking CENVAT credit

Contd.

CENVAT Credit(Rule-3)Rule-3(5) input and CG removed as such

APL purchased pigments valued Rs.110000(inclusive of excise duty @ 10%) for manufacture of paint. It availed CENVAT credit of Rs.10000. APL subsequently cleared the said inputs as such from factory in following manner

Sales to APPG (Purchase Price 20000) 40000 Sales to Local Paint Manufacturer (Purchase Price 10000)10000 Transfer to APL-ANK Plant (Purchase Price 70000) NIL

How much CENVAT credit to reverse in each case ? [ 20000 x ( 10000 / 100000 ) ] = 2000 [ 10000 x ( 10000 / 100000 ) ] = 1000 [ 70000 x ( 10000 / 100000 ) ] = 7000

Contd.

CENVAT Credit(Rule-3)Rule-3(5A) CG cleared as waste/scrap

When CG is cleared as waste/scrap manufacturer shall PAY an amount equal to

duty leviable on transaction value cleared on the cover of invoice

Contd.

CENVAT Credit(Rule-3)Rule-3(5B) input or CG written off

When ‘input’ or ‘CG before being put to use’ on which CENVAT credit is taken is written off fully provision to write off is made in books of

accounts manufacturer shall PAY an amount

equal to CENVAT credit taken thereon However if later on such provision is

reversed then take credit

Contd.

CENVAT Credit(Rule-3)Rule-3(5C) Reversal in case of remission of duty u/r.21 of CE Rules,2002

When payment of duty on FG is ordered to be remitted u/r.21 of CE Rules,2002 then manufacturer has to REVERSE CENVAT credit taken on inputs used in manufacture of such FG

Contd.

CENVAT Credit(Rule-3)Rule-3(6) Credit on payment u/r.3(5 & 5A)

The amount PAID under sub-rule 5 and 5A of rule 3, shall be eligible as CENVAT credit as if it was duty paid by the person who removed such goods u/r.3(5 & 5A)

Contd.

CENVAT Credit(Rule-3)Rule-3(7) restriction in utilization of CENVAT credit on EC and SHEC

CENVAT credit on EC can be utilized for payment of EC only, however credit of EC on excisable goods can be used for payment of EC on taxable services and vice versa

CENVAT credit on SHEC can be utilized for payment of SHEC only, however credit of SHEC on excisable goods can be used for payment of SHEC on taxable services and vice versa

Contd.

CENVAT Credit(Rule-3)Rule-3(7) CENVAT credit w.r.t. inputs manufactured by 100% EOU/EHTP/STP and used in DTA

CENVAT credit admissible is AV x [{1+(BCD/200)} x (CVD/100)] AV = Assessable Value BCD = Basic Customs Duty Rate CVD = Additional duty of Customs Rate

E.g. AV=100000, BCD=10%, CVD=8%, EC=1%, SHEC = 2% CENVAT credit = 100000 x [{1+(10/200)} x (8.24/100)] = 8652

Contd.

Conditions for allowing CENVAT Credit(Rule-4)Rule-4(1 & 2 ) when to take CENVAT credit

CENVAT credit in respect of input is taken IMMEDIATELY ON RECEIPT of input in the factoryImmediately does not mean within 24 hrs, credit can be taken at any time to subsequent to receipt

CENVAT credit in respect of CG received during FY is taken as follows: not exceeding 50% of duty paid on such CG in same

FY balance credit may be taken in any FY subsequent to

the FY in which CG were received provided such CG are in possession of manufacturer

However ADC can be availed 100% on receipt of capital goods

Contd.

Conditions for allowing CENVAT Credit(Rule-4)Rule-4(1 & 2 ) when to take CENVAT credit

APL manufactures paints which were considered by them to be exempted from payment of duty. After 2 years of their commencing operations, Excise officer made a case against them holding that the products manufactured by them are chargeable to duty. APL agreed to pay duty however APL also want to claim benefit of CENVAT credit of duty paid on inputs.

Whether APL’s claim tenable? Pasumai Irrigation Ltd. v. CCEx. [1999] (Tri.)

Contd.

Conditions for allowing CENVAT Credit(Rule-4)Rule-4(3) Legal ownership of CG

APL purchased CG worth Rs.1.1 Crore(inclusive of Excise duty @ 10%). However APL borrowed Rs.0.55 Crore from HDFC Bank as loan to pay to vendor. Excise officer wants to allow only half (Rs.0.05 Crore. Rs.0.025 in first year and balance in subsequent year)

Whether excise officer’s claim tenable? Why?

Contd.

Conditions for allowing CENVAT Credit(Rule-4)Rule-4(4) disallowance of credit on which depreciation is claimed u/s.32 of IT Act

CENVAT credit will be disallowed to the extent depreciation is claimed u/s.32 of IT Act on excise portion of cost of asset

Contd.

Conditions for allowing CENVAT Credit(Rule-4)Rule-4(5) input/CG sent for jobwork

Inputs and CG on which credit is taken can be sent for further processing, test, repair without payment of duty based on a challan

The goods should be received into the factory on completion of job work within 180 days

If not received within 180 days , the CENVAT should be reversed and on receipt of the material again credit can be taken.

CENVAT credit shall be allowed on jigs, fixtures, moulds and dies sent by manufacturer to a job worker Contd.

Conditions for allowing CENVAT Credit(Rule-4)Rule-4(7) credit on service tax on actual payment basis

CENVAT credit in respect of input service shall be allowed; on or after the day on which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or challan referred to in Rule-9

Refund of CENVAT credit(Rule-5)Rule-5 Refund of CENVAT credit

When any input or input service is used in manufacture of

finished product which is cleared for export under bond or LUT

intermediate product which is cleared for export

providing output service which is exported

CENVAT credit in respect of input or input service shall be allowed to be utilized towards payment of duty of excise on FG service tax on output service

if such adjustment is not possible, the manufacturer shall be allowed the REFUND of such CENVAT credit

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(1) inputs used in manufacture of exempted goods

What if inputs are used only in exempted goods ? Credit is prohibited if inputs are used exclusively

in exempted goods

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(2) inputs used in manufacture of exempted goods as well as goods chargeable to duty

Separate accounts to be maintained for inputs used in exempted and dutiable goods

Credit admissible only on quantity used in dutiable products

What if manufacturer do not want to maintain two separate accounts?

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(3 & 3A) inputs used in manufacture of exempted goods as well as goods chargeable to duty (separate accounts not maintained)

two options pay 5% of the value of the exempted goods

value(u/s.4/4A) is excluding sales tax and other taxes whether discount is admissible? is CENVAT credit admissible of the 5% amount paid by the

supplier?

pay an amount equal to the CENVAT credit attributable to the inputs used in or in relation to manufacture of exempted goods

amount is calculated u/r.6(3A)

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(2, 3 & 3A) Example

Total value of exempted goods cleared from factory = 150 Lakhs

Assessable Value of dutiable goods = 200 Lakhs(BED=8%) CENVAT credit on input ‘X’ which was exclusively used for

manufacturing exempted goods = 20 Lakhs CENVAT credit on input ‘Y’ which was exclusively used for

manufacturing dutiable goods = 10Lakhs CENVAT credit on input ‘Z’ which was used for manufacturing

exempted goods as well as dutiable goods (no separate books of account maintained) = 10 Lakhs

Compute duty liability provided assessee opted for option I i.e. to pay 5% of value of exempted goods? Rs. 3.5 Lakhs

Compute duty liability provided assessee opted for option II i.e. to pay proportionate duty of value of exempted goods ? Rs. 0.3 Lakhs

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(2, 3 & 3A) inputs used in manufacture of exempted goods as well as goods chargeable to duty (separate accounts not maintained)

How the debit can be made?

By debiting CENVAT or otherwise (PLA)

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(4) CG used in manufacture of exempted goods

No credit admissible

If CG used for exempted and dutiable goods Procedures CENVAT credit admissible

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(5) exception for certain input services

No separate accounts for following input services used for manufacture of dutiable as well as exempted goods

(a) architect (b) consulting engineer (c) foreign exchange broker (d) management consultant (e) security agency (f) interior decorator (g) maintenance or repair (h) construction (i) banking & other financial services (j) technical testing/analysis (k) scientific /technical consultancy (l) intellectual property service (m) technical inspection and service (n) erection, commissioning or installation (o) insurance auxiliary services relating to life insurance

Full credit is allowed

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)Rule-6(6) subrules 1 to 4 not applicable if goods removed w/o payment of duty to SEZ etc

Rule-6(1), 6(2), 6(3) and 6(4) not applicable if excisable goods are removed without payment of duty to

SEZ 100% EOU EHTP/STP United Nations exported under bond supplied against international bidding gold/silver arising in course of manufacture of copper/zinc

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)case study

APL was engaged in manufacture of paints(BED=8%), water based paints(BED=16%) and Eco distemper(BED=0%). Eco distemper was entirely exported by APL under bond without payment of duty. APL claimed refund of CENVAT credit attributable to inputs used in manufacture of Eco distemper exported by it.

Excise officer contended that since Eco distemper was already exempt from excise duty, APL could not export it under bond. Moreover, as APL did not maintain separate accounts for dutiable and exempted goods ordered them to pay 5% of value of Eco distemper.

Whether department’s view correct? Repro India Ltd. v. UOI [2009] (Bom.)

Contd.

Obligation of manufacturer of dutiable and excisable goods(Rule-6)CENVAT Reversals in certain cases

When inputs are used for other than manufacture of final products say pure R&D not connected with manufacture

When reprocessing or repairs are done not amounting to ‘manufacture’

When exempted goods are say supplied to a foreign embassy under exemption

Internal consumption within the factory of inputs other than in manufacture of exempted capital goods

Storage of input outside factory(Rule-8)

DC/AC, as the case may be, by an order permit storage of input o/s. factory

order to be given having regard to the nature of goods and shortage of storage space

DC/AC may specify limitations/conditions

Documents and accounts(Rule-9)

Credit only on the following documents : Excise invoice Bill of Entry Excise Invoice of registered first stage

dealer Excise Invoice of second stage dealer Excise Invoice issued by an importer from

his godown or Registered Consignment Agent

Challan for payment of differential CVDContd.


Credit only on the following documents : Excise Invoice of registered first stage

dealer of imported goods Excise Invoice of second stage dealer of

imported goods Invoice issued by a manufacturer for inputs

or capital goods Supplementary invoice for any reason -

except fraud

Contd.


Is Duplicate excise invoice the only document for credit Rule does not specify that duplicate copy is

required

Contd.


Who is a 1st/2nd stage dealer? What if the inputs or capital goods are received

from dealers? Is a depot of a manufacturer a 1st stage or 2nd

stage dealer? Who ‘purchases’ from the manufacturer Can inputs be purchased thro’ a dealer who is not

registered Credit allowable only if dealer maintains account

and passes on pro rata credit Odd sub-rule - how does one check this?

Contd.


Manufacturer to maintain records Manufacturer to maintain records of

receipt, disposal, consumption, inventory of inputs and capital goods.

Burden to prove admissibility will be on the manufacturer

Monthly return before 10th of each month

Information relating to principal inputs(Rule-9A)

principal input means cost of any input constitutes 10% or more in total cost of raw materials

File ER-5 by 30th April every year of each FY ( input/output ratio ) if any alteration in above, then, intimate before or

after 15 days of such change

File ER-6 by 10th of close of month regarding receipt and consumption of each principal input

Procedures and facilities for LTU(Rule-12A)

inputs or capital goods can be transferred within plants of LTU w/o payment of duty provided inputs so transferred are utilized for

manufacture of FG and such FG are cleared from factory on payment

of duty or, exported under bond or LUT

if not, then, receiving plant shall pay amount equal to CENVAT credit taken by sender plant plus interest

If capital goods are used exclusively for manufacture of exempted goods or removed as such, receiving plant to pay duty with interest

receiver plant however can take credit first CENVAT credit can be distributed among

plants

Recovery of CENVAT credit wrongly taken(Rule-14)

When credit is wrongly taken wrongly utilized erroneously refunded

same will be recovered along with interest

u/s.11A & 11AB of CE Act and u/s.73 & 75 of Finance Act

Contd.

Recovery of CENVAT credit wrongly taken(Rule-14)

What if credit wrongly availed is not utilized ?

Whether interest payable ?

Maruti Udyog Ltd. [2007] (SC)

Confiscation and Penalty(Rule-15)Rule-15(1) contravention of rules

When credit on input/CG is wrongly taken wrongly utilized

in contravention of any provisions of rules such goods are liable to confiscation and such person is liable for penalty not

exceeding credit amount or Rs. 2000

Contd.

Confiscation and Penalty(Rule-15)Rule-15(2) fraud, wilful mis-statement

When credit on input/CG is wrongly taken wrongly utilized

on account of fraud wilful mis-statement collusion suppression of facts contravention of act/rules with intent to evade

payment of duty manufacturer is liable for not exceeding credit

amount or Rs. 2000 plus penalty u/s.11AC of CE Act Contd.

Confiscation and Penalty(Rule-15)Rule-15(3) input services

When credit on input services is wrongly taken without reasonable steps to check service tax is

paid as per documents u/r.9 and such person is liable for penalty not

exceeding credit amount or Rs. 2000

Contd.

Confiscation and Penalty(Rule-15)Rule-15(4) input services - fraud, wilful mis-statement

When credit on input services wrongly taken wrongly utilized

on account of fraud willful mis-statement collusion suppression of facts contravention of act/rules with intent to evade

payment of duty manufacturer is liable for not exceeding credit

amount or Rs. 2000 plus penalty u/s.78 of Finance Act

General Penalty(Rule-15A)

If no penalty is prescribed and, contravention of any provisions of these rules maximum penalty of 5000

Any Queries ?????

Thanks

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