CBEC Brings in new ER-1 Form With Hardly any Change - Education Cess and SHE Cess Merged?
CBEC has notified new ER-1 and ER-3 Forms. ER-1 is the monthly return for production and removal of goods and other relevant particulars and CENVAT credit and ER-3 is the quarterly return to be filed by SSI Units.
It is not really known why the CBEC had to change these forms, because there is hardly any change. Assessees who pay more than Rs. 10 Lakhs duty will anyway file the returns electronically; so it is only the small manufacturers who will have to get the new forms printed.
In the new ER-1, in Sl.No. 8 - Details of CENVAT credit taken and utilized ; there is no column for Secondary and Higher Education Cess - there is only one column for Education Cess. Has the Board merged Education Cess and SHE Cess? Even in the Instructions at the end of the form, SHE Cess has been omitted. In Sl. No. 12 of the instructions, the other duties are specified. Even here there is only Education Cess and no SHE Cess.
Does it mean that the two cesses are merged? If so, it is a good gesture. In fact they could simply make it as the duty inclusive of cesses. If the duty is 10 percent, it can be shown as 10.3 percent inclusive of the two cesses. That will save a lot of work and unnecessary accounting confusion.
But the Board seems to have forgotten one simple aspect - As per Rule 3(7)(b) of the CENVAT Credit Rules, the Credit of SHE Cess can be used only for payment of SHE Cess. Now how are they going to monitor this when the two cesses are clubbed in the return?
The Column for “Credit utilized for payment of amount in terms of Rule 6 of the CCR”, is omitted. CAN CENVAT CREDIT BE USED FOR PAYMENT OF 5 PERCENT AMOUNT AS SPECIFIED UNDER RULE 6(3)(i) OF THE CENVAT CREDIT RULES?
Notification No. , Dated: July 18, 2011