Returns to be filed by Small Scale Units - CENVAT Credit Rules, 2004 need to be amended in tune with Central Excise Rules, 2002
IN the Budget 2010, an important amendment has been made in Rule 12 of the Central Excise Rules by substituting the provisio under Rule 12 of the Central Excise Rules 2002 as under:
Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, he shall file a quarterly return in the form specified, by notification, by the Board, of production and removal of goods and other relevant particulars within ten days after the close of the quarter to which the return relates.
The effect of this amendment is that though a Small Scale unit pays excise duty without availing the benefit of SSI exemption, they can file the returns quarterly, instead of monthly by within 10 days of the close of the quarter. The same has also been explained by the JS (TRU) in the letter dated 26.2.2010 as under:
Amendments have been made in the CENVAT Credit Rules, 2004 and Central Excise Rules, 2002. These amendments come into effect on the 1st of April, 2010. The important point about these relaxations is that they are available to any assessee who is “eligible” to claim SSI exemption regardless of whether he actually claims it or opts to pay duty. An “eligible” unit has been defined as one whose aggregate value of clearances did not exceed Rs. 4 crore in the preceding financial year. Moreover, the benefit is available to a unit that is eligible for the entire financial year even if it crosses the limit of Rs. 4 crore (aggregate value of clearances) during the year.
The date of filing of quarterly returns by SSI units is being aligned with the date for non-SSI units so that all returns are required to be filed by the 10 th of the month following the said quarter.
However, the ER 1/ ER 3 returns are prescribed under Rule 12 of the Central Excise Rules and Rule 9(7) of the CENVAT Credit Rules 2004. Rule 9(7) of the CENVAT Credit Rules still reads:
Provided that where a manufacturer is availing exemption under a notification based on the value or quantity of clearances in a financial year, he shall file a quarterly return in the form specified, by notification, by the Board within twenty days after the close of the quarter to which the return relates.
Therefore this rule also requires an amendment in harmony with Rule 12 of the Central Excise Rules, 2002.