Dealer Registration NOT mandatory for transit sale - CBEC Clarifies
THE Board has really acted with lightning speed. It was only yesterday that DDT had covered about a dangerous clarification given by a Chief Commissioner that dealers have to mandatorily take registration.
The Government's amendments to Rule 11 of the Central Excise Rules, though were meant to facilitate were taken as regulatory by the field officers and the bull really had a run through the China shop. An assessee informed that business virtually came to a halt for the last 45 days or so. Interpretative skills of the bureaucrats can create havoc. Yesterday Mr.Veerappy Moily said in the Lok Sabha, "this country has become a curse of bureaucracy".
By Notification No. 8/2015-C.E. (N.T.), dated 1st March 2015, the following proviso was added to Rule 11(2) of the Central Excise Rules, 2002.
"Provided also that if the goods are sent directly to any person on the direction of the Registered dealer, the invoice shall also contain the details of the registered dealer as the buyer and person as the consignee, and that person shall take Cenvat credit on the basis of the registered dealer's invoice".
And this is what created the panic as some field officers insisted that dealers have to get registered mandatorily. They insisted that CENVAT credit will not be allowed on the strength of Manufacturer's invoice when the goods are sold through a non-registered dealer.
A colleague of mine told me, "the manufacturer's invoice is like a DD, the dealer's invoice is like a cheque - they want to reject the DD and accept a cheque"
Yesterday, DDT wrote,
It is high time that the CBEC intervenes and comes out with a clarification lest this issue should snowball into a major controversy which will, in the final run, not fetch any revenue to the government but certainly assist Consultants and Advocates laugh all the way to the bank.
Was the amendment beneficial or was it one more method of harassing the assessees?
If this is called "Ease of doing business", so be it…..
And we are elated - by evening, Board came up with a clarification; And what a super clarification!.
Board clarifies:
(i) Where a registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. In such cases no Cenvatable invoice shall be issued by the registered dealer in favour of the consignee though commercial invoice can be issued. Where a registered dealer negotiates sale of goods from the total stock ordered on a manufacturer or an importer to multiple buyers and orders direct transportation of goods to the consignees and the manufacturer or the importer is willing to issue individual invoices for each sale in favour of the consignees for such individual sale, the same procedure shall apply.
(ii) Where a registered dealer negotiates sale by splitting a consignment procured from a manufacturer or a registered importer and issues Cenvatable invoices for each of the sale, it would now be possible for the dealer to order direct transport of the consignments as per the individual sales to the consignee without bringing the goods to his godown. This would save time and transportation cost for the dealer adding to ease of doing business. This is a new facility which flows from the amended provisions. Procedure as prescribed in the third proviso of rule 11(2) shall be applicable in such case.
(iii) Where a un-registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. As the dealer is not registered, there is no question of issuing any Cenvatable invoice by him. Such dealers as in the past can continue to be un-registered.
(iv) Where goods are sold by the registered importer to an end-user (say a manufacturer) who would avail credit on the basis of importer's invoice and the goods are transported directly from the port or warehouse at the port to the buyer's premises, the amendment prescribes that for such movement the factum of such direct transport to the buyer's premises needs to be recorded in the invoice.
The Board clarification not only addresses the crux of the issues, but also has granted additional benefits like direct transport in case of split consignments.
Finally the Board explains that the new provisos are meant to improve the ease of doing business by providing an additional facility to the registered dealer or importer for direct dispatch of goods from the manufacturer to the consignee, when he is issuing Cenvatable invoice,. They do not withdraw any past facility. These amendments should therefore be harmoniously interpreted with the existing rules and circulars in conformity with the legal provisions, keeping the intention of the Government in mind.
This is real governance and this is perhaps what the Prime Minister has been trying to tell the bureaucrats. This visible change in the attitude of the Board should go a long way in the cause of ease of doing business.
As the businessmen heave a sigh of relief, we loudly proclaim - THANK YOU CBEC.
Please also see
1. yesterday's DDT
2. DDT 2584 under the caption - CBEC - Please Listen; Please spare us of 'registration' - Rule 11 of CER, 2002.
3. Is CENVAT credit on transit sale allowed only if made through Registered dealer?
CBEC Circular No. 1003/10/2015-CX, Dated: May 05, 2015