Amendment to CENVAT Credit Rules - Rectification of Mistakes
GOVERNMENT has amended Rule 3 the CENVAT Credit Rules, 2004 - basically to correct certain mistakes.
As per Rule 3(5), when inputs or capital goods are removed as such, an amount equal to the credit availed has to be paid back.
As per Rule 3(5A), when capital goods are removed after use, a depreciated credit amount has to be paid back.
As per Rule 3(5B), credit taken on the written off inputs has to be paid back. This sub rule also has an explanation that if the amount required to be paid under sub rules 5, 5A and 5B is not paid, recovery shall be made as per Rule 14. Now this explanation is not proper here; it should have been after rule 5C. (So it is now replaced and put in its rightful place)
As per Rule 3(5C), if duty on final product is remitted under Rule 21 of the Central Excise Rules, 2002, the CENVAT credit on the inputs used in the manufacture of those goods has to be reversed. This sub-rule does not mention the input services used in the manufacture of the goods on which duty remission is granted. This is now rectified. The CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods also has to reversed.
These sub-rules also do not specify the date on which the payments are to be made - whether the payment is to be made on the date of removal of the inputs as such (etc.) or by the 5th of the next month. This lapse is also now rectified. An explanation is added that the payment under Sub-rules 5, 5A, 5B and 5C shall be paid on or before the 5th of the following month except for the month of March. It is also made explicitly clear that the payment can be made by debit entry in the CENVAT account.
Since the Explanation under rule 3(5B) has been omitted, another Explanation numbered 2 is added below sub-rule 5C to prescribe that in the event of failure to pay the amount payable under sub-rules (5), (5A), (5B) and (5C), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken and utilised.
Notification No. , Dated: January 08, 2014