Even the Duckworth Lewis method would be put to shame by Rule 6(3A) of the Cenvat Credit Rules, 2004.
The Duckworth Lewis method or D/L method is a set of formulas and tables created by Frank Duckworth and Tony Lewis. The method was adopted by the International Cricket Council (ICC) in 1999 to address the problem of delayed one-day cricket matches for reasons of rain, poor light and floodlight failures although it has also been used in events that have been shortened due to crowd problem, sandstorms and even snowstorms.
A website was also designed to help a range of users - from people with little or no knowledge of the D/L method to professionals who would like assistance to do the complicated calculations with ease. This site also allows users to run complicated reports based on the results of the D/L calculations. There is also a calculator on this site which allows one to make calculations by just feeding in the data asked & pronto you get the revised target scores to be achieved or if the play is stopped, which team won!
The very fact that this formula is being used for nearly a decade itself indicates that the same has correctly addressed the various variable factors involved in a cricket match.
Be that as it may, the present amendment made in Rule 6(3) of the Cenvat Credit Rules, 2004 by notification 10/2008CE(N.T) dated 01.03.2008 (w.e.f 01.04.2008) tries to emulate the Duckworth-Lewis system excepting of course that none in the TRU have sought recognition for the same.
As to why there was no such ruckus when a similar sub-rule named clause (d) was inserted last year by notification 10/2007CE(N.T) dated 01.03.2007 (w.e.f 01.04.2007) in rule 6(3) of the CCR, 2004 [albeit optional, just like now] for output service providers who provided both dutiable & exempted services & availed credit on common inputs & input services, is not known.
Truly speaking & to be fair enough to the Board, it needs to be mentioned that the amendments proposed in rule 6 & the new formula laid down in sub-rule (3A) tries to achieve a harmony amongst the various permutations & combinations that can emerge in a given situation where a manufacturer and/or a service provider takes credit of inputs &/or input services &/or manufactures dutiable and/or exempted final products and/or taxable and/or exempted services.
Inasmuch as since the said formulae was experimented with Service providers who provided both dutiable & exempted services & availed the Cenvat credit on inputs as well as input services, the Board has taken the next logical step – extend it to manufacturer’s too & provide a unified formula.
I am just about worried about certain things (though these apprehensions ought to have been raised earlier) –
++ What if a manufacturer and/or service provider does not exercise the option yet follows the provisions of sub-rule 3A of rule 6 of the Cenvat Credit Rules, 2004;
++ As to why the interest rate is kept so high at @24% since if the assessee does not pay the same (i.e interest) but only pays the finally determined amount, the only provision to recover it is rule 14 of the CCR, 2004 & which in turn stipulates that the provisions of section 11A & 11AB are to be applied mutatis mutandis; since section 11AB requires payment of 13%, wouldn’t a manufacturer not opt to not pay interest u/r 6(3A) of CCR, 2004;
++ If short payment of amount can attract interest @24%, what about excess payment of amount which credit is allowed to be taken suo motu as per clause (f) upon self determination of final amount – can this fetch some interest!
++ Clause (h) ought to have also expressly provided for a situation where the manufacturer/service provider was not into existence in the preceding financial year.
Probably, this is the Board’s way of compelling every manufacturer/service provider to fall in line & pay the amount as per rule 6(3)(i) of the Cenvat Credit Rules, 2004. Okay, if you still wish to go by rule 6(3A), let us make optimum use of Section 14AA which is thoroughly underutilized nowadays!
It would be a good idea if the Board patents this formula without further loss of time & give it a name!
What we don’t understand is what takes the Board so much time to correct this aberration!