CENVAT CREDIT RULES – 2004 –
w.e.f. 10/9/2004
Computation of Service Tax liability
(ST. – 3 ) & input credit allowability (Monthwise)
1.0 Service tax payable on output
service (return in ST – 3):
| 1.1
|
Date of invoice. |
| 1.2 |
Invoice No. |
| 1.3 |
Nature of service - category. |
| 1.4 |
Value of taxable service provided |
| 1.5 |
Amount realised |
| 1.6 |
Date of realisation of bill |
| 1.7 |
Amount of service tax |
| 1.8 |
Total monthly amount of service tax. |
| 1.9 |
Amount of input (goods) & service
tax credit available (para 2.8 + 3.9 ) |
| 1.10 |
20% (35% upto 9/10/2004) of output
service tax payable |
| 1.11 |
Input credit availed (1.9 or 1.10 whichever
is lower). |
| 1.12 |
Service tax amount payable. (1.8 less
1.11 ) |
| 1.13 |
Balance input credit c/f (1.9 less
1.11 ) |
2.0 Input credit (Annexure to
ST –3 ) for input services:
| 2.1
|
Date of invoice. |
| 2.2 |
Invoice No. |
| 2.3 |
Value of input service |
| 2.4 |
Details of input service provider (ST registration
no. & address) |
| 2.5 |
Details of input service ( description & category
of service) |
| 2.6 |
Date of payment & cheque number. |
| 2.7 |
Amount of service tax education cess paid against
the bill. |
| 2.8 |
Total monthly amount of input service tax (input
credit available) and education cess paid. |
3.0 Input credit (Annexure to
ST -3 ) for input (goods):
| 3.1 |
Date of invoice. |
| 3.2 |
Invoice nos of the manufacturer / importer / 1st
or 2nd stage
dealer. |
| 3.3 |
Assessable value of input (goods) |
| 3.4 |
Details of input manufacturer (registration no.
& address) |
| 3.5 |
Details of inputs |
| 3.6 |
Amount of duty & education cess as per bill
and cheque number |
| 3.7 |
Date of payment |
| 3.8 |
Duty & education cess amount paid against respective
bills |
| 3.9 |
Total monthly amount of input
duty (input credit available) & education cess
paid |
| 3.10 |
Closing balance of last day
of previous month of the input credit, credit available
during the month (para 2.8 & 3.9) less credit
availed (para 1.11 above) = closing balance (c/f
amount) |
A Note on CENVAT Credit Rule 2004
Additional requirements for manufacturers
In additional to our note on CENVAT credit
rules 2002 as applicable to output service provider, we
deal herewith additional points to be kept in mind for applicability
to the manufacturers.
1.0 Transitory provisions :
It has been provided that the output service provider or
a manufacturer or a producer of a final product will be
allowed to take CENVAT credit of
| 1.1 |
Credit earned by
manufacturer under CENVAT Credit Rule 2002 as remained
unutilised prior to 10/09/2004 |
| 1.2 |
Duty paid on inputs lying in
the stocks or in process or contained in the final
products lying in the stock. |
1.3
|
Duty paid on input received
on and after 10/09/04 and lying in the stock used
for providing in taxable service.
|
2.0 Time of allowing CENVAT credit:
The CENVAT credit in respect of input may
be taken immediately on receipt of inputs in the factory
of manufacturer or in the premises of output service provider.
3.0 Refund of CENVAT credit:
Any input or input service used in final
product which is cleared for export under bond or letter
of undertaking or used in intermediate products cleared
for export or used in output service which is exported,
the CENVAT credit in respect of such input or input service
shall be allowed towards:
| 3.1 |
Duty on excise
on any final product cleared for home consumption
or for export on payment of duty. |
| 3.2 |
Service tax on output service |
| 3.3 |
Where for any reason such adjustment
is not possible the manufacturer shall be allowed
refund of such amount subject to conditions. |
| 3.4 |
No refund will be allowed to the manufacturer or
service provider who avails duty drawback. |
4.0 Conditions for manufacturer
who manufactures exempt final product or provide exempt
services along with taxable final products and / or services
who do not maintain separate account :
Where a manufacturer uses common inputs
(except inputs used as fuel) or input services in both dutiable
goods/exempted goods, either he is required to maintain
separate accounts in respect of both and must not claim
credit on inputs / input services used in the exempted goods
or if he opts not to do so, he must pay :-
| 4.1 |
Incase the exempted
goods are falling under heading 22.04 & 48.01
of first schedule to the Excise Tariff Act, or chapter
27 (Naptha) 50 to 63 or for defence projects or
to the Ministry of Defence under specified notifications,
than CENVAT credit attributable to input and input
services used in manufacture of such final product
shall be repaid. |
| 4.2 |
If exempted goods are other
than mentioned in para 4.1 than the manufacturer
shall pay 10% of total prise (excluding sales tax
& other taxes) if any, paid on such goods. |
| 4.3 |
The amounts mentioned in 4.1
& 4.2 shall be paid by the manufacturer or the
output service provider by debiting CEVAT credit
or otherwise. |
| 4.4 |
The above restrictions are
not applicable incase the excisable goods are cleared
to unit in SEZ, 100% EAU, EHTP (Electronic Hardware
Technology Park) or STP (Software Technology Park),
supplied to United Nations or exempted projects
funded by International Organisations, or cleared
for exports under bond.
|
5.0 In respect of input & capital
goods purchased from 1st or 2nd stage dealer :
Such 1st or 2nd stage dealer maintains
records indicating that the input or capital goods was supplied
from the stock on which duty was paid by the producer and
only the amount of prorata duty is indicated in the invoice
issued by him.
6.0 Other Conditions:
| 6.1
|
Inputs are available
for credit only if they are used within the factory
of production in manufacture of final products or
in relation thereto. Inputs need not be physically
present in the final product. Inputs need not be
physically present as paint / packing material /
fuel / for generation of electricity / steam for
being used in or in relation to manufacture of final
products / any other purpose / accessories supplied
with final products also are included |
| 6.2 |
Input used in the manufacture
of capital goods meant for captive use are also
available for credit. |
| 6.3 |
No CENVAT credit is allowed
on capital goods used exclusively in the manufacture
of exempted goods other than the final products
exempt by virtue of quantity of clearance made in
a financial year. |
7.0 Manufacturers to submit returns:
| 7.1 |
Monthly return
within 10 days from close of each month. |
| 7.2 |
Manufacturer availing exemption
under notifications based on value or quantity in
a financial year shall file quarterly return within
20 days after a close of quarter.
|
Writer’s observations :
It appears from above that onerous responsibility
is cast on service providers and manufacturers for claiming
CENVAT credit and compliance of service tax has increased
manifold w.e.f. 10.09.2004 with integration of credit of
input services and goods. It will also be time-consuming
task to capture data correctly from the existing accounting
system, which may not be geared up for this and need modifications.
It may also happen that such data is required to be collated
from various depots/branches/regions. It is pertinent to
note that liability to service tax arises on the basis of
receipt of bill amounts and input credit is allowed on the
basis of payments. Now the assessee will have to keep track
of outstanding receivables and payables along with carried
forward input credit. In case of wrong claim of credit or
availing of credit of duty or input without taking “reasonable
steps” to ensure that appropriate duty has been paid
on the input as indicated in invoice or other document,
the penalty can be upto the amount of duty or Rs.10000/-
whichever is higher. (Rule 13(1))
|
