Amendments in the Cenvat Credit Rules, 2004 and the Central Excise Rules, 2002

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The Finance Minister had constituted a Forum under the Chairmanship of Dr. Parthasarathy Shome and the Forum had received certain difficulties faced by the trade and there was one of the issues:

Issue: The earlier practice of endorsement of Bill of Entry by customs officer to an importer has since been dispensed with. This has led to ambiguity as to the mechanism by which CENVAT credit would be available to a subsequent manufacturer receiving the imported goods. 

Decision provided by Forum: A process is being designed to get the importers to register with the Department, who may then more easily pass on the CENVAT credit of CVD to a manufacturer. The new mechanism will be in place by 31/12/2013. 

Effective changes made to resolve the issue: 

Rule 9 of the Central Excise Rules, 2002 (“the Excise Rules”) provide the list of persons who are required to obtain registration under the Central Excise Act, 1944 (“the Excise Act”). Notification 17/ 2013-Central Excise (N.T.) dated December 31, 2013 (“Notification No. 17”) has amended Rule 9(1) to include the importers issuing an invoice on which Cenvat Credit can be taken, in the list of persons who are required to obtain registration under the Excise Act.

Notification 18/ 2013-Central Excise (N.T.) dated December 31, 2013 (“Notification No. 18”) has amended Rule 2(ij) of the Cenvat Credit Rules, 2004 (“the Credit Rules”) which provides the definition of First Stage Dealer. Amended definition of First Stage Dealer is reproduced here under:

First stage dealer means-
i.        a dealer, who purchases the goods directly from the manufacturer under the cover of an invoice issued in terms of the provisions of the Excise Rules or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or
ii.        an importer who sells goods imported by him under the cover of an invoice on which Cenvat credit may be taken and such invoice shall include an invoice issued from his depot or the premises of his consignment agent.

Further, there is corresponding changes in Rule 9 of the Credit Rules, which provides the list of eligible documents on the basis of which the manufacturer or output service provider or input service distributor can avail Cenvat credit.

Summary of Changes made in the Excise Rules and the Credit Rules:
·         An importer issuing Cenvatable invoice is now made a “First Stage Dealer”
·         Registration is made mandatory for importers issuing invoices on which CENVAT Credit can be taken

Note: These changes are effective from 1.3.2014.

Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Mobile: +91 9810604563
E-mail:
bimaljain@hotmail.com
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1st Floor, MayurVihar, Phase–I,

Delhi – 110091 India 

Complete Notification is given below

Notification No. 17 /2013 – Central Excise (N.T.) 

New Delhi, the 31th  December, 2013 
10, Pausha, Saka, 1935 

G.S.R. (E). - In exercise of the powers conferred by section 37 of the Central Excise 
Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to 
amend the Central Excise Rules, 2002, namely:- 

1. (1) These rules may be called the Central Excise (Third Amendment) Rules, 2013. 

 (2) They shall come into force with effect from the 1st  day of March, 2014. 

2. In the Central Excise Rules, 2002,- 

  • (a) in rule 9, in sub-rule (1), after the words “uses excisable goods” the words “or an importer who issues an invoice on which CENVAT Credit can be taken,” shall be inserted; 
  • (b) in rule 11, in sub-rule (7), -
    • (i) the first proviso shall be omitted; 
    • (ii) in the second proviso, for the words „Provided further‟ the words, “Provided” shall be substituted. 

 F. No. 267/83/2008-CX.8 
 (Pankaj Jain) 
Under Secretary to the Government of India 


Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (i), dated the 1st March, 2002 vide notification number 04/2002-Central Excise (NT), dated the 1st March, 2002 vide number G.S.R. 143(E), dated the 1st March 2002 and were last amended vide notification number 15/2013-Central Excise (NT) dated 22nd  November, 2013, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (1), vide number G.S.R 747(E), dated 22nd  November, 2013. 

Notification No. 18 /2013-Central Excise (N.T.) 
 New Delhi, the 31th  December, 2013 
 10, Pausha, Saka, 1935 
G.S.R. (E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32  of 1994), the Central Government hereby makes the following rules further to  amend the CENVAT Credit Rules, 2004, namely:- 
1. (1) These rules may be called the CENVAT Credit (Third Amendment)  Rules, 2013. 
(2) They shall come into force with effect from the 1st  day of March, 2014. 
2. In the CENVAT Credit Rules, 2004,- 
(a) in rule 2, in clause (ij),- 
(i) the words “a dealer, who purchases the goods directly from” shall be omitted; 
(ii) in sub-clause (i), for the words, “the manufacturer under the  cover of an invoice” the words “a dealer, who purchases the  goods directly from the manufacturer under the cover of an  invoice” shall be  Substituted; 
(iii) for sub-clause (ii), the following sub-clause shall be substituted,  namely:- 
“ (ii) an importer who sells goods imported by him under the cover of an invoice on which CENVAT credit may be taken and such invoice shall include an invoice issued from his depot or the premises of his consignment agent”; 
(b) in rule 9, in sub-rule (1), in clause (a), sub-clauses (ii) and (iii) shall be omitted. 

F. No. 267/83/2008-CX.8 
 (Pankaj Jain) 
Under Secretary to the Government of India

COMMENTS

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