The confusion created by the 2008 budget.
By Notification No. 10/2008, the 75% has been reduced to 50%. So now the duty payable by EOUs would be like this:-
value | 100 |
BCD = 50% of the actual duty | 5 |
Value for CVD | 105 |
CVD = 16% of 105 | 16.8 |
Total duty | 21.8 |
Of this CVD /excise duty component would be | 16.8 |
But the Cenvat Credit Rules have not been amended to suitably increase the credit to be allowed. This would have been correct if the formula for credit was changed to
X multiplied by {( 1+B C D /200) multiplied by ( CVD /100)}].
The figure 400 should have been substituted with 200. Let us see the formula with our numbers.
100x [1+10/200 ] x16 /100 = 100x210 / 200x16 /100 = 100x1.05x0.16 = 16.8 (which is the amount of CVD payable.)
We brought this to the notice of the Board in our Seminar at Hyderabad and the very obliging Member Mr. Sridhar promised to answer the questions raised in the Seminar.
The question raised by an assessee was,
In the recent budget, the duty now chargeable would be equivalent to 50% of the Basic Customs duty plus CVD (as applicable) as per notification no 10/2008 CE dated 01-03-2008 . We request you to kindly advice us any corresponding amendment with regard to availment of Cenvat credit under Rule 5(7) of Cenvat Credit Rules, 2004.
And the reply we received from the Board tersely states, “there has been no amendment in this provision”!!!!!!!!!!!!!!!!!!!!!