Amendments in Central Excise Relevant for CA Final November -2015 Examination

• Under Rule 4(1) and 4(2) Inputs and Capital goods can be sent to the job-worker directly without bringing in the factory or premises of service provider (assessees) and they can cenvat credit as soon as inputs and capital goods are received by the job-worker. Notification No. 6/2015 CE (NT) dated 01.03.2015

• Accordingly another amendment is in Rule 4(5). Inputs sent to job-worker directly should be received back by the assessee within 180 days otherwise he will have to make reversal of cenvat credit availed on inputs (no change). However, in case of capital goods, the period has been increased to two years.

• Time limit for availing the cenvat credit on inputs and input services under Rule 4(1) and 4(7) respectively has been increased to one year.

• In case of partial RCM services, the service receiver is entitled to avail credit for the amount of service tax that he is required to pay to the central government directly only after actually making payment to the Central Government. He is not required to make any reversal of credit if he has paid the amount of service tax to the government but has not paid to the service provider. [w.e.f. 1.4.2015]

• Reversal of credit required to made under Rule 4 i.e. Rule 4(5) and 4(7), shall be made within 5 days after the end of month failing which provisions of Rule 14 (wrongly availing credit) will be attracted.

• In Rule 5, export goods have been defined i.e. any goods which are to be taken out of India to a place outside India.

• Under Rule 6, exempt goods include even non-excisable goods also. It means where an assessee uses common inputs and input services for dutiable and exempt goods as well as taxable and exempt services, if assessee avails full credit on all inputs and input services, he will have to pay duty @ 6% even on non-excisable goods.

• Provisions of Rule 9(4) applicable to FSD and SSD regarding maintenance of records are now applicable to registered importer also.

• Under Rule 12AAA, restrictions can be imposed on registered importer also due to misuse of provisions related to cenvat credit.

• CENVAT credit wrongly taken will be recovered in accordance with the provisions of Section 11A of the Central Excise Act, 1944 and Section 73 of the Finance Act 1994.

• Where an assessee has wrongly availed excess credit and utilized it then utilization the utilisation thereof will be deemed to have occurred in the following manner, namely: - 

1. the opening balance of the month has been utilised first; 
2. credit admissible in terms of these rules taken during the month has been utilised next; 
3. credit inadmissible in terms of these rules taken during the month has been utilized thereafter. 

• Circular No. 990/14/2014 CX dated 19.11.2014 clarifies that the time limit of one year for availing cenvat credit  would not apply when re-credit is taken of amount reversed under: 

1. third proviso (now second proviso) to rule 4(7) of the CENVAT Credit Rules, 2004 (CCR) 
2. rule 3(5B) of CCR 
3. rule 4(5)(a) of CCR, 

       after meeting the conditions prescribed in these rules. The limitation period of 6 months applies

• Circular No. 999/6/2015 CX dated 28.02.2015 – For the purpose of exports of goods by the manufacturer exporter  the place of removalwill be the port/ICD/CFS where the shipping bill is filed by the manufacturer exporter. However, if manufacturer supplies the goods to the merchant exporter then the place of removal shall be factory gate but on case to case, it may differ also.

General Procedures Under Central Excise

• Provisions of Section 11 will be attracted in case of non-payment/short payment of duty for recovery of the amount of duty, interest and penalty.

• Under Rule 10 DSA can be maintained digitally provided every page is is also signed digitally. The CBEC is authorised to prescribe the conditions and procedure for maintaining records digitally.

• Rule 11 - When capital goods and inputs are sent directly to the job-worker as per the instructions of the manufacturer or service provider, the invoice issued by the vendor shall contain description of the manufacturer/service buyer and details of the job-worker as consignee.

• Similarly, if goods are directly sent to any person on the direction of the registered dealer, the invoice will also contain the details of the registered dealer as the buyer and the person as the consignee, and that person will take CENVAT credit on the basis of the registered dealer‘s invoice.

• If the goods imported under the cover of a bill of entry are sent directly to buyer‘s premises, the invoice issued by the importer should mention that goods are sent directly from the place or port of import to the buyer‘s premises [Fourth proviso].

• A registered importer is also authorised to issue cenvatable invoice and in relation to issue of invoice, all the provisions applicable to FSD and SSD are applicable to such registered importer also. [Rule 11(7)]

• Authentication of invoices by means of digital signatures has been provided by inserting new sub-rule (8) in rule 11. New sub-rule (8) provides that an invoice issued under this rule by a manufacturer may be authenticated by means of a digital signature. The Board may notify the conditions, safeguards and procedure to be followed by an assessee issuing digitally signed invoices.

• For delayed filing of returns under rule 12, penalty of Rs. 100/-per day subject to maximum of Rs. 20,000. Same provisions are applicable for delayed filing of returns by EOUs registered as per Rule 170

• Rule 12CCC providing for restrictions that can be imposed by the Chief Commissioner are applicable to Registered importer also.

• Rule 18 – Export goods defined - For the purposes of this rule, “export”, with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied t o a foreign going aircraft.” [Supply of goods to 100% EOU will not be treated as export but supply to SEZ units will be treated as export]

• Provisions of Rule 22 regarding furnishing of information of the records maintained and making the records available for inspection by the officers are applicable to registered importer also.

• Penalty provisions of Rule 25 are applicable to Registered importer also.

• Registration under Central Excise shall be granted within two days after submission of application. Verification of documents and premises may take place later on.

• Application for Advance Rulings can also be made by firms. Firm includes sole proprietorship, partnership, limited liability partnership as well as one person company.