The CENVAT Credit Rules Overhauled - Creditably · TIOL-DDT 2797

The CENVAT Credit Rules Overhauled - Creditably

By Vijay Kumar

THE CENVAT Credit Rules, beneficial as they are, have been swords hanging by hairs on the heads of assessees and several simplifications attempted earlier have resulted in more complications. The scheme is thirty years old and in these thirty years, we have filled up the court dockets with unending litigation. For the first time perhaps, some changes are made assuming that every assessee is not a thug out to cheat the system and the Board is not meant to add to the agony of the assessee.

Here are some of the good measures:

1. CENVAT Credit on equipment and appliance used in an office located within the factory are being included in the definition of capital goods so as to allow CENVAT credit.
2. CENVAT credit on inputs and capital goods used for pumping of water, for captive use in the factory, is allowed even where such capital goods are installed outside the factory.
3. Capital goods having value up to Rs. ten thousand per piece are included in the definition of inputs. This would allow an assessee to take full credit on such capital goods in the same year in which they are received . Further they are liberated from all the rigours of capital goods.
4. CENVAT credit on tools of Chapter 82: Manufacturer of final products is allowed CENVAT credit on tools of Chapter 82 of the Central Excise Tariff in addition to credit on jigs, fixtures, moulds & dies, when intended to be used in the premises of job-worker or another manufacturer who manufactures the goods as per specification of manufacturer of final products. A manufacturer can send these goods directly to the other manufacturer or job-worker without bringing the same to his premises.
5. Permission valid for three years: the permission given by an Assistant Commissioner or Deputy Commissioner to a manufacturer of the final products for sending inputs or partially processed inputs outside his factory to a job-worker and clearance therefrom on payment of duty is valid for a financial year. Now it would be valid for three financial years.