Date of Option under rule 6(3A) of CCR, 2004 - whether intimation is required before exercising option?
A Netizen sent us this mail -
“Sub-rule 3A of Rule 6 of CENVAT Credit Rules, 2004 is extracted below -
(3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:-
(a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely:-
(i) x x x;
(ii) date from which the option under this clause is exercised or proposed to be exercised;"
The moot question is as to whether this “letter of option” has to be given to the Superintendent before "exercising" or otherwise. The reason being that the figures to be taken for calculating the “amounts” change if the period varies.
The foremost fact is that the “amount” is a provisional amount [excluding the situation mentioned in condition (h) of sub-rule (3A) to rule 6 of CCR, 2004] and in either case needs to be “finalized” and paid by the 30 th of June of the succeeding financial year. Needless to mention, an option once exercised the same has to be continued for the remaining part of the financial year as mandated in Explanation-I to rule 6(3) of the CCR, 2004.
In such a situation, when a manufacturer has to exercise the option, why should it be treated as being necessarily before exercising the option?
The words employed are "while exercising this option", "date from which the option under this clause is exercised", "or proposed to be exercised".
To illustrate –
In case a manufacturer wishes to exercise the option under sub-rule 3A w.e.f 01.05.2012, he can either –
+ intimate the R/S on 01.04.2012 the above
+ he can exercise the option on 01.05.2012 and intimate the same on any later date to the R/S;
+ he can exercise the option on 01.05.2012 and intimate the same to the R/s on the 01.05.2012 itself.
I feel that in view of the fact that the sub-rule 3A does not contain the words "Such option shall be exercised before effecting his first clearances …" as appearing in clause 2(i) of the SSI Notification 8/2003-CE, creating a fuss about the “intimation date” is not called for since the “amount” would in any case be determined finally at the end of the “financial year” and is required to be paid by the 30 th June of the succeeding financial year.