Finance Bill enacted – ER1 and ST3 ready for another round of revision?

By Vijay Kumar

Vide Notification 27/2007 CE (NT), dated 12.5.2007, the Cenvat credit rules have been amended consequent to the Finance Bill receiving the assent of the President. In Sub-rule 7(b) of Rule 3 of these rules, two provisos have been inserted as:

“Provided that the credit of the education cess on excisable goods and the education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services:

Provided further that the credit of the Secondary and Higher Education Cess on excisable goods and the Secondary and Higher Education Cess on taxable services can be utilized, either for payment of the Secondary and Higher Education Cess on excisable goods or for the payment of the Secondary and Higher Education Cess on taxable services

The above provisos imply that the credit of ED Cess can not be used for payment of SHE cess and vice versa. Therefore separate accounts shall be maintained for credit of ED Cess and SHECess.

The present ER1 form has nine columns with regard to Cenvat Credit and with separation of ED cess and SHE Cess, two more columns need to be inserted and the ER1 and ST3 form need further revision.

Interestingly the proviso to Rule 3(7)(b) from 1.3.2007 to 11.5.2007 was as under:

Provided that the credit of the education cess on excisable goods and the secondary and higher education cess on excisable goods and education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or secondary and higher education cess on excisable goods or for the payment of education cess on taxable services.

So, from 1.3.2007 to 11.5.2007, the two cesses could be intermixed and ED Cess could be used for payment of SHE cess and SHE cess could be used for payment of ED cess.

Is the restriction placed from 12.5.2007 a conscious decision or a problem with drafting?