Cenvat Credit Rules

Indirect Taxes by Prof.
Rajesh Tayal
Part I
for
CA/CS Final and CMA students
By
Prof. Rajesh Tayal
FCS
TAYAL INSTITUTE PRIVATE LIMITED
403 !"!efinity Road #o.$ % P #a&ar A'o(e Indian )(erseas Ban*
+ore&aon ,-ast. M/MBAI 400003
Tayal Institute Private Limited, Mumbai Ph: !"!#$%!, &mail: tayalsir'(mail.com
1
Indirect Taxes by Prof. Rajesh Tayal
Ph1 324200$2 e3ail1 tayalsir4&3ail.5o3
2
Prefa5e
Dear Friends,
I welcome you all for the lectures on Indirect Taxes. This is one of the most scoring
subjects for CA Final.
This book is the first art of the study material to be ro!ided to you by me. "elie!e
me that you don#t ha!e to refer any other material excet $
a. The material gi!en by me,
b. %odule ro!ided by the ICAI,
c. &ractice %anual and
d. 'T&.
This study material has been reared with my !ast exerience of teaching
thousands of students across India, in more than ()) batches.
*our study attern should be
a. C+,-AT Credit 'ules, ()).
b. Central +xcise
c. -AT
d. Customs
e. /er!ice Tax.
0ectures ha!e been recorded in the same order and material will also be ro!ided to
you in the same order.
1hile attending the lectures, lease kee noting e!erything in the same manner in
which it is resented in the class. That will make your studies not only easy but also
interesting. I will concise the subject for you to such an extent so that you can
re!ise entire syllabus e!en on the day of exam.
For any 2uery lease feel free to call me on )345446(7)) between 3.4) &% and
66.)) &% or write to me on tayalsir8gmail.com
9ay studying
&rof. Tayal
3
Contents
Pa&e #o.
$. #otes on C-#6AT Credit Rules 2004 4
2. Pra5ti5al Pro'le3s on C-#6AT Credit 33
3. Case 7a8s re5o33ended 'y ICAI 40
4. Te9t of C-#6AT Credit Rules 2004 0:
4
C-#6AT Credit Rules 2004
;hat is C-#6AT 5redit < This is a system under which a manufacturer of excisable goods
who is liable to ay excise duty and a ro!ider of taxable ser!ices who is liable to ay
ser!ice tax is gi!en credit for excise duty, custom duty and ser!ice tax aid or ayable by
him on his Caital :oods, Inuts and Inut ser!ices.
The credit so a!ailed by the assessee is allowed to be utili;ed by him for discharging his own
liability of excise duty and ser!ice tax.
Manufa5turer < A manufacturer is liable to ay duty only if $
6. :oods manufactured by him are excisable goods
(. The goods are not e9e3=ted &oods
4. The assessee is not a!ailing !alue based exemtion <//I +xemtion= or the exemtion
limit has already been exceeded.
6alue Based -9e3=tion < -ide ,otification ,o. 7>())4, the Central :o!ernment has
authorised a manufacturer to a!ail exemtion based on the !alue of goods remo!ed by
him. This exemtion is otional for the assessee.
-li&i'ility for e9e3=tion < A manufacturer is entitled for this exemtion during the
current financial year only if the !alue of excisable goods remo!ed by him, from his all
remises <factories=, for home consumtion during the receding financial year has
not exceeded 's. .)) lacs.
-9e3=tion < If a manufacturer is eligible for exemtion, as mentioned abo!e, then
during current financial year, he is not liable to ay duty until !alue of the dutiable
goods remo!ed during current financial year from his all remises, for home
consumtion, does not exceed 's. 6?) lacs.
5
Ser(i5e Pro(ider " A ser!ice ro!ider is liable to ay ser!ice tax only if $
6. The acti!ity carried out by the erson amounts to ser!ice
(. The ser!ice is not co!ered under the ,egati!e 0ist
4. The ser!ice is not co!ered under any +xemtion notification
.. The assessee is not a!ailing /mall /er!ice &ro!ider exemtion or the exemtion limit
has already been exceeded.
S3all Ser(i5e Pro(ider -9e3=tion < -ide ,otification ,o. 44>()6(, the Central
allowed has authorised a ser!ice ro!ider to a!ail exemtion based on the !alue of
taxable ser!ices ro!ided by him. This exemtion is otional for the assessee.
-li&i'ility for e9e3=tion < A ser!ice ro!ider is entitled for this exemtion only if
the aggregate !alue of all taxable ser!ices ro!ided by him, from his all remises
during receding financial year has not exceeded 's. 6) lacs.
-9e3=tion < If a ser!ice ro!ider is eligible for exemtion, as mentioned abo!e, then
during current financial year, he is not liable to ay ser!ice tax until the aggregate
!alue of all taxable ser!ices ro!ided by him does not exceed 's. 6) lacs.
6
!uties for 8hi5h 5redit is a(aila'le < Rule 3,$.
Central -95ise Custo3s Ser(i5e Ta9
"asic +xcise Duty
#ote " Credit is not
a!ailable for the duty
aid on goods co!ered
under ,otification ,o.
6>()66 and at entry ,o.
@5 and 6(7 of
notification ,o.
6(>()6(.
Additional Custom duty under section
4<6= of the CTA
#ote < If a !essel is brought to India
for breaking than Credit is a!ailable
only for 7?A of the duty.
/er!ice Tax
/ecial +xcise Duty /ecial Additional custom Duty under
section 4<?= of the CTA
<#ote $ If the assessee is a ser!ice
ro!ider, he cannot a!ail credit for
this duty=
/ecial +xcise Duty on
:oods of /ecial
Imortance
/ecial +xcise Duty on
Textile and Textile
Articles
,ational Calamity
Contingency Duty
Addl. +xcise duty u>s
6?5 of Finance Act 34
Addl. +xcise Duty u>s 7?
of Finance Act 3?
+ducation cess #ot allo8ed +ducation Cess
/9+/ #ot allo8ed /9+/
#ote" Credit can always be a!ailed for the amount shown of duty>tax shown in the
document on the basis of which credit is being taken irresecti!e of the fact that
ayment has not been made or only art ayment is made or art ayment itself is made
as full and final ayment.
>uestion " M/s. RC i3=orted so3e in=uts and =aid Basi5 Custo3s !uty Rs
?la*hs sur5har&e on 5usto3s duty Rs. ?0000 and C6! Rs $ la*h. Cal5ulate the
a3ount that he 5an 5lai3 as C-#6AT 5redit. ;ould it 3a*e any differen5e if
the assessee is not a 3anufa5ture 'ut a ser(i5e =ro(ider@
Ans8er " %>s 'C can take credit of 's. 6,)),))) i.e. of additional duty of customs
<C-D=. 'ule 4<6= of CC' allows credit of additional duty of customs imosed under
section 4 of CTA. The credit of other two duties i.e. "CD and surcharge on custom
duty is not allowed.
7
It will not make any difference if the assessee is a ser!ice ro!ider as credit of
additional duty of customs <C-D= can be a!ailed both by manufacturers and the
ser!ice ro!iders alike but credit of C-D u>s 4<?= will not a!ailable to a ser!ice
ro!ider.
/tilisation of Cen(at Credit < Rule 3,4.
/ubject to these restrictions, C+,-AT credit can be utilised for $
a. &ayment of excise duty and ser!ice tax
b. 'e!ersal of credit on remo!al of caital goods and inuts under 'ule 4<?=, 4<?A=
and 4<?"= of the CC'
c. 'e!ersal of credit under 6@ of C+'
Credit can be utilised for discharging liability of central excise duty and ser!ice tax
but other than ayment of interest and enalty. Custom duty cannot be aid through
credit.
Credit can be utilised only uto the extent it is actually a!ailable at the end of the
month or 2uarter for which duty is ayable. <Credit a!ailed in the current month or
2uarter cannot be utilised for discharging earlier liability=
Credit for +C and /9+/ can be utilised for discharging resecti!e liability and not for
any other urose. 9owe!er, +C and /9+C can be aid out of credit of +C and /9+C
resecti!ely or out of other credits excluding credit of ,CC' or in csh.
,CCD can be aid either through credit of ,CCD or in cash and credit of ,CCD
cannot be utilised for any other urose.
Credit of /ACD u>s 4<?= of CTA cannot be utilised for aying ser!ice tax.
Clean +nergy Cess cannot be aid out of C+,-AT credit.
8
C-#6AT 5redit on 5a=ital &oods < Rule 4,2. " 4,4.
Rule 2,a.A5a=ital &oodsA meansBC
<A= the following goods, namelyBC
<i= all goods falling under Chater 7(, Chater 7., Chater 7?, Chater 3),
heading @7)?, grinding wheels and the like, and arts thereof falling under
heading @7). of the First /chedule to the +xcise Tariff ActD
<ii= ollution control e2uimentD
<iii= comonents, sares and accessories of the goods secified at <i= and <ii=D
<i!= moulds and dies, jigs and fixturesD
<!= refractories and refractory materialsD
<!i= tubes and ies and fittings thereofD

<!ii= storage tank and
<!iii= motor !ehicles other than those falling under tariff headings 75)(, 75)4,
75)., 7566 and their chassis, but including dumers and tiers
usedC
<6= in the factory of the manufacturer of the final roducts, but does not include any
e2uiment or aliance used in an officeD or
<6A= outside the factory of the manufacturer of the final roducts for generation of
electricity for cati!e use within the factoryD or
<(= for ro!iding outut ser!iceD
<"= motor !ehicle designed for transortation of goods including their chassis registered
in the name of the ser!ice ro!ider, when used forC
<i= ro!iding an outut ser!ice of renting of such motor !ehicleD or
<ii= transortation of inuts and caital goods used for ro!iding an outut
ser!iceD or
<iii= ro!iding an outut ser!ice of courier agency
<C= motor !ehicle designed to carry assengers including their chassis, registered in the
name of the ro!ider of ser!ice, when used for ro!iding outut ser!ice ofC
<i= transortation of assengersD or
<ii= renting of such motor !ehicleD or
<iii= imarting motor dri!ing skills
<D= comonents, sares and accessories of motor !ehicles which are caital goods for the
assesse.
9
A(ailin& the Credit < Rule 4,2. 4,3. and 4,4.
A manufacturer can a!ail credit on caital goods only when goods ha!e been
recei!ed in the factory.
If the caital goods relate to generation of electricity then credit is
a!ailable e!en if goods are not recei!ed in the factory.
In case of a ser!ice ro!ide, it is sufficient that the goods are recei!ed by
him at any lace but the receit of such goods shall be suorted through documentary
e!idence regarding lace and time of deli!ery of goods.
Credit can be a!ailed only when goods as well as the documents on the basis
of which credit can be a!ailed, both are a!ailable. Therefore, if these two are recei!ed
on different dates, then credit can be a!ailed not before the later date.
During the first financial year in which caital goods are recei!ed $
a. an assessee a!ailing //I exemtion is entitled to a!ail full credit for all the duties
immediately
b. for any other assessee, credit is restricted to ?)A. <)A to ?)A=
"alance credit <?)A to 6))A= can be a!ailed in any of the subse2uent financial years
ro!ided the goods are in ossession of the assessee. 9owe!er, certain caital goods,
if consumed within the factory or at the lace of the jobCworker are always deemed
to be in ossession for the urose of C+,-AT credit.
It is also to be noted that the credit for /ecial Additional Custom Duty chargeable
under section 4<?= of the Custom Tariff Act is a!ailable to the extent of 6))A during
first year itself.
#ote < If caital goods are remo!ed during the first financial year in which those are
recei!ed than instead of ?)A, the assessee is authorised to a!ail 6))A C+,-AT
credit during first financial year itself.
Credit on caital goods can be a!ailed e!en if those are ac2uired on lease or
hireCurchase basis from a finance comany. For a!ailing credit, ossession is more
imortant than ownershi
In case of ser!ice ro!ider, this will not be alicable for motor !ehicles because, on
motor !ehicles, a ser!ice ro!ider can a!ail C+,-AT credit only if the !ehicle is
registered in the name of ser!ice ro!ider.
Credit can be a!ailed for that art of duty which has not been caitali;ed
i.e.it is not dereciated.
10
Re3o(al of 5a=ital &oods on 8hi5h 5redit has 'een a(ailed
Re3o(al as su5h < Rule 3,?.
1here caital goods, on which C+,-AT credit has been a!ailed are remo!ed Eas such# than
the entire credit a!ailable on such goods shall be re!ersed immediately. 9owe!er, if the
assessee has not a!ailed full credit, he is authorised to a!ail balance credit before making
re!ersal.
This re2uirement will not be alicable where caital goods are remo!ed for ro!iding ser!ice
outside.
>uestion " B. 7td. Pur5hased a Borin&"!rillin& 3a5hine at a 5u3 duty =ri5e of Rs.
32$44C0. The -95ise duty rate 5har&ed on the said 3a5hine 8as 4 $0D. The
3a5hine 8as =ur5hased on de=re5iation 4 2?D follo8in& Strai&ht 7ine Method. /sin&
the said infor3ation ans8er the follo8in& Euestion1
,i. ;hat is the -95ise duty =aid on the 3a5hine@
,ii. ;hat is the Cen(at 5redit allo8a'le under Cen(at Rules@
,iii. ;hat is the a3ount of 5en(at 5redit re(ersi'le or duty =aya'le at the ti3e of
5learan5e of the said 3a5hinery If re3o(ed as su5h@
Ans8er <
Co3=utation of duty assessa'le (alue and C-#6AT 5redit
CumCduty &rice 4(6..5@
+xcise Duty 8 6@..7A <4(6(.5@ F 6@..7 > 66@..7= .?.53?
Assessable !alue (5?3@76
C+,-AT Credit allowable during first Financial year $ ?)A ((5435
"alance credit allowable in any subse2uent financial year $ ?)A ((5437
Credit 'e!ersible $ 6))A .?.53?
;or*in& notes
6. As er 'ule .<(= of CC', C+,-AT credit is limited to the extent of ?)A during the
financial year in which caital goods are recei!ed and balance can be a!ailed in any of the
subse2uent financial years , if the caital goods are in ossession.
(. As er 'ule 4<?=, if caital goods are remo!ed as such, 6))A of the credit a!ailable shall
be re!ersed and as er 'ule .<(=, in case of such re!ersal, the assessee is authorised to a!ail
balance credit also in the first financial year itself.
11
Re3o(al after use < Rule 3,?A.
In case of remo!al of caital goods after artial use, the assessee is authorised to retain
rescribed amount of cen!at credit and balance credit shall be re!ersed.
For the urose of this rule, caital goods ha!e been di!ided into two categories i.e.
comuter and eriheral and all other caital goods.
Per5enta&e of Credit that 5an 'e retained 'y the assessee
Comuter and eriherals Gther caital goods
6
st
year $ for e!ery three
months or art
6)A
For e!ery 4 months
or art thereof
(.? A (
nd
months or art
7A
4
rd
months or art
?A
.
th
and ?
th
year C for e!ery
three months or art
6A
The eriod of three months is to be counted from the date on which credit is a!ailed.
#ote1 If amount of duty ayable on transaction !alue is higher than the amount of C+,-AT
credit re!ersible, as calculated abo!e, then such higher amount of duty shall be ayable.
+oods 8ritten off in the 'oo*s of a55ount < Rule 3,?B.
1here any caital goods are written off, artially or fully or a ro!isions is made for the
same, in the books of account rior to being ut to use, then entire credit a!ailed thereon
shall be re!ersed and if such goods are utilised again at any time in future, then credit can
be a!ailed once again.
Sendin& out for re=airs 3aintenan5e et5. < Rule 4,?.
If caital goods on which credit has been a!ailed are re2uired to be sent outside for getting
those reaired, it re2uires rior aro!al of AC>DC and the aro!al is gi!en subject to the
condition that the goods shall be recei!ed back within 67) days otherwise the assessee shall
re!erse the credit and he can a!ail the credit once again on goods being recei!ed back.
Sendin& out for =ro(idin& ser(i5e
There is no ro!ision to regulate the time within which caital goods sent outside for
ro!iding ser!ice shall be recei!ed back.
12
Credit on In=uts
Rule 2,*. Fin=utG means<
<i= all goods used in the factory by the manufacturer of the final roductD or
<ii= any goods including accessories, cleared along with the final roduct, the !alue of
which is included in the !alue of the final roduct and goods used for ro!iding
free warranty for final roductsD or
<iii= all goods used for generation of electricity or steam for cati!e useD or
<i!= all goods used for ro!iding any outut ser!iceD but excludesC
<A= light diesel oil, high seed diesel oil or motor sirit, commonly known as etrolD
<"= any goods used for C
<a= construction or execution of works contract of a building or a ci!il structure
or a art thereofD or
<b= laying of foundation or making of structures for suort of caital goods,
excet for the ro!ision of ser!ice ortion in the execution of a works contract or
construction ser!ice as listed under clause <b= of section @@+ of the ActD
<C= caital goods excet when used as arts or comonents in the manufacture of a final
roductD
<D= motor !ehiclesD
<+= any goods, such as food items, goods used in a guesthouse, residential colony, club or
a recreation facility and clinical establishment, when such goods are used rimarily for
ersonal use or consumtion of any emloyeeD and
<F= any goods which ha!e no relationshi whatsoe!er with the manufacture of a final
roduct.
-9=lanation. < For the urose of this clause, Hfree warrantyI means a warranty ro!ided
by the manufacturer, the !alue of which is included in the rice of the final roduct and is
not charged searately from the customerD
13
A(ailin& 5redit on in=uts < Rule 4,$.
A manufacturer can a!ail full cen!at credit on inuts as soon
as goods are recei!ed by him in the factory.
Rule : < Deending on nature of goods or shortage of sace
in the factory, on such terms and conditions as the
Commissioner deems fit, he may authorise storage of inuts
outside the factory in a warehouse and to a!ail credit
thereon in the factory. The lace where inuts are allowed
to stored outside the factory shall be treated as a factory
for the urose of C+,-AT credit.
A ser!ice ro!ider can a!ail
full cen!at credit on inuts
as soon as inuts are
recei!ed by him at any
lace. The receit of inuts
shall be suorted by
documentary e!idence
regarding time and lace of
deli!ery of goods.
Re3o(al of in=uts on 8hi5h 5redit has 'een a(ailed
Re3o(al as su5h < Rule 3,?.
1here inuts, on which cen!at credit has been a!ailed are remo!ed Eas such# than the entire
credit a!ailable on such goods shall be re!ersed immediately.
Any such re!ersal is not re2uired where inuts are re2uired to be remo!ed Eas such# for
ro!iding ser!ice related to guarantee>warrantee offered along with the goods and the !alue
of which is already included in the !alue of finished goods.
+oods 8ritten off in the 'oo*s of a55ount < Rule 3,?B.
1here any inuts are written off in the books of account, artially or fully or e!en if a
ro!isions if made for the same, rior to being ut to use, then entire credit a!ailed thereon
shall be re!ersed and if such goods are utilised again at any time in future, then credit can
be a!ailed once again.
+oods destroyed < Rule 3,?C.
1here any of the finished goods are destroyed before remo!al and remission of duty is
allowed under 'ule (6 of the Central +xcise 'ules, ())(, the assessee shall re!erse the
credit taken for inuts used in manufacture of such goods.
Rule 2$ of Central -95ise Rules 20021 Re3ission of duty
1here finished goods are destroyed or lost or those become nonCmarketable otherwise,
before remo!al from the factory, on an alication of the assessee, the Central +xcise
officer may allow remission <wai!er= of duty on such goods, within the limit rescribed.
14
)ffi5er A3ount of duty u=to 8hi5h re3ission 5an
'e allo8ed 'y hi3
/uerintendent 's. 6),)))
Asst.>Dy. Commissioner +xceeding 's. 6),))) but not exceeding 's.
6,)),)))
Jt. Commissioner +xceeding 's. 6,)),))) but not exceeding
's. ?,)),)))
Commissioner +xceeding 's. ?,)),)))
In=uts sent for jo' 8or* < Rule 4,?. and 4,0.
1here any of the inuts or semiCfinished goods are re2uired to be sent outside for jobCwork
without re!ersal of credit, it re2uires rior aro!al of AC>DC and this aro!al is gi!en on
annual basis.
The assessee shall recei!e back all the goods within 67) days failing which he shall re!erse
the credit and if goods are recei!ed back subse2uently, credit can be taken again.
>uestion " Briefly dis5uss 8ith the reasons 8hether in the follo8in& 5ase Cen(at Credit
is a(aila'le to an assessee and if yes to 8hat e9tent@
An assessee =ur5hased in=uts 8ei&hin& $000 H&s. The duty =aid on in=uts 8as Rs.
$0000 'ut durin& transit ?00H&s in=uts 8ere destroyed.
Ans8er < /ince the assessee has recei!ed only ?)) Kgs inuts in the factory, he can a!ail
credit only to the extent of 's. ?))) because as er rule .<6= of C+,-AT Credit 'ules, ()).
the C+,-AT credit in resect of inuts may be taken immediately on receit of the inuts in
the factory of the manufacturer or ro!ider of outut ser!ice.
'ule ( of CC', ()). ro!ides that any goods used in the factory where finished goods are
manufactured are eligible as inuts. Therefore, the goods which are not e!en recei!ed in the
factory cannot considered to be inuts.
Re5o(ery of C-#6AT 5redit
-ide notification ,o. 4>()64, an exalantion has been inserted after 'ule 4<?"= which
states that H If the manufacturer of goods or the ro!ider of outut ser!ice fails to ay
the amount ayable under subCrules <?=, <?A=, and <?"=, it shall be reco!ered, in the manner
as ro!ided in rule 6., for reco!ery of C+,-AT credit wrongly takenI.
1
1
Inserted vide Notification No. 3/2013-Central Excise (N.T.), Dated 1/03 2013.
15
In=ut Ser(i5e
Rule 2,l. Fin=ut ser(i5eG means any ser!ice, C
<i= used by a ro!ider of outut ser!ice for ro!iding an outut ser!iceD or
<ii= used by a manufacturer, whether directly or indirectly, in or in relation to the
manufacture of final roducts and clearance of final roducts uto the lace of
remo!al,
and includes ser!ices used in relation to modernisation, reno!ation or reairs of a factory,
remises of ro!ider of outut ser!ice or an office relating to such factory or remises,
ad!ertisement or sales romotion, market research, storage uto the lace of remo!al,
rocurement of inuts, accounting, auditing, financing, recruitment and 2uality control,
coaching and training, comuter networking, credit rating, share registry, security,
business exhibition, legal ser!ices, inward transortation of inuts or caital goods and
outward transortation uto the lace of remo!alD but excludes,C
,A. ser!ice ortion in the execution of a works contract and construction ser!ices
including ser!ice listed under clause <b= of section @@+ of the Finance Act <hereinafter
referred as secified ser!ices= in so far as they are used for C
<a= construction or execution of works contract of a thereofD or building or a ci!il
structure or a art
<b= laying of foundation or making of structures for suort of caital goods,
excet for the ro!ision of one or more of the secified ser!icesD or
,B. ser!ices ro!ided by way of renting of a motor !ehicle, in so far as they relate to
a motor !ehicle which is not a caital goodsD or
,BA. ser!ice of general insurance business, ser!icing, reair and maintenance , in so
far as they relate to a motor !ehicle which is not a caital goods, excet when used by C
<a= a manufacturer of a motor !ehicle in resect of a motor !ehicle manufactured
by such erson D or
<b= an insurance comany in resect of a motor !ehicle insured or reinsured by such
ersonD or
,C. such as those ro!ided in relation to outdoor catering, beauty treatment, health
ser!ices, cosmetic and lastic surgery, membershi of a club, health and fitness centre,
life insurance, health insurance and tra!el benefits extended to emloyees on !acation
such as 0ea!e or 9ome Tra!el Concession, when such ser!ices are used rimarily for
ersonal use or consumtion of any emloyeeDI
16

A(ailin& C-#6AT 5redit on in=ut ser(i5es < Rule 4,C.
The C+,-AT credit in resect of inut ser!ice shall be allowed, on or after the day on which
the in!oice, bill or, as the case may be, challan referred to in rule 3 is recei!edB
Pro(ided that in case of an inut ser!ice where the ser!ice tax is aid on re!erse charge by
the reciient of the ser!ice, the C+,-AT credit in resect of such inut ser!ice shall be
allowed on or after the day on which ayment is made of the !alue of inut ser!ice and the
ser!ice tax aid or ayable as indicated in in!oice, bill or, as the case may be, challan
referred to in rule 3B
Pro(ided further that in case the ayment of the !alue of inut ser!ice and the ser!ice tax
aid or ayable as indicated in the in!oice, bill or, as the case may be, challan referred to in
rule 3, is not made within three months of the date of the in!oice, bill or, as the case may be,
challan, the manufacturer or the ser!ice ro!ider who has taken credit on such inut ser!ice,
shall ay an amount e2ual to the C+,-AT credit a!ailed on such inut ser!ice and in case the
said ayment is made, the manufacturer or outut ser!ice ro!ider, as the case may be, shall
be entitled to take the credit of the amount e2ui!alent to the C+,-AT credit aid earlier
subject to the other ro!isions of these rulesB
Pro(ided also that if any ayment or art thereof, made towards an inut ser!ice is
refunded or a credit note is recei!ed by the manufacturer or the ser!ice ro!ider who has
taken credit on such inut ser!ice, he shall ay an amount e2ual to the C+,-AT credit
a!ailed in resect of the amount so refunded or creditedB
Pro(ided also that C+,-AT credit in resect of an in!oice, bill or, as the case may be,
challan referred to in rule 3, issued before the 6
st
day of Aril, ()66 shall be allowed, on or
after the day on which ayment is made of the !alue of inut ser!ice and the ser!ice tax aid
or ayable as indicated in in!oice, bill or, as the case may be, challan referred to in rule 3.
-9=lanation I." The amount mentioned in this subCrule, unless secified otherwise, shall be
aid by the manufacturer of goods or the ro!ider of outut ser!ice by debiting the
C+,-AT credit or otherwise on or before the ?th day of the following month excet for the
month of %arch, when such ayment shall be made on or before the 46st day of the month of
%arch.
-9=lanation II. C If the manufacturer of goods or the ro!ider of outut ser!ice fails to
ay the amount ayable under this subCrule, it shall be reco!ered, in the manner as ro!ided
in rule 6., for reco!ery of C+,-AT credit wrongly taken.
-9=lanation III." In case of a manufacturer who a!ails the exemtion under a notification
based on the !alue of clearances in a financial year and a ser!ice ro!ider who is an indi!idual
or rorietary firm or artnershi firm, the exressions, Hfollowing monthI and Hmonth of
%archI occurring in subCrule <5= shall be read resecti!ely as Hfollowing 2uarterI and
H2uarter ending with the month of %arch.
17
C-#6AT 5redit on &oods =ro5ured fro3 $00D -)/ et5. < Rule
3,C.
The C+,-AT credit in resect of inuts and caital goods cleared from an exortC
oriented undertaking or by a unit in +lectronic 9ardware Technology &ark or in a
/oftware Technology &ark, as the case may be, on which such undertaking or unit has
aid C
<A= excise duty le!iable under section 4 of the +xcise Act <+xcise duty shall be the
aggregate of Additional Custom Duty under section 4<6= of the Custom Tariff Act
and /ecial Additional custom Duty under section 4<?= of the Custom Tariff Act=
<"= the +ducation Cess le!iable under section 36 read with section 34 of the Finance
<,o. (= Act, ()). and
<C= the /econdary and 9igher +ducation Cess le!iable under section 64@ read with
section 647 of the Finance Act, ())5, on the excise duty referred to in <A=
-9=lanation." 1here the ro!isions of any other rule or notification ro!ide for
grant of whole or art exemtion on condition of nonCa!ailability of credit of duty
aid on any inut or caital goods, or of ser!ice tax aid on inut ser!ice, the
ro!isions of such other rule or notification shall re!ail o!er the ro!isions of these
rules.
;hy re(ersal < Rule 3,0.
The amount aid under subCrule <?= and subCrule <?A= shall be eligible as C+,-AT
credit as if it was a duty aid by the erson who remo!ed such goods under subCrule
<?= and subCrule <?A=.
18
)ther !efinitions
Rule 21 !efinitions " In these rules, unless the context otherwise re2uires,C
,'. ACusto3s Tariff A5tA means the Customs Tariff Act, 635? <?6 of 635?=D
,5. A-95ise A5tA means the Central +xcise Act, 63.. <6 of 63..=D
,d. Ae9e3=ted &oodsA means excisable goods which are exemt from the whole of the
duty of excise le!iable thereon, and includes goods which are chargeable to L,ilL rate of
duty goods in resect of which the benefit of an exemtion under ,otification ,o. 6>()66C
C+, dated the 6st %arch, ()66 or under entries at serial numbers @5 and 6(7 of
,otification ,o. 6(>()6(CC+, dated the 65
th
%arch, ()6( is a!ailed
,e. Ae9e3=ted ser(i5esA means aC
<6= taxable ser!ice which is exemt from the whole of the ser!ice tax le!iable
thereonD or
<(= ser!ice, on which no ser!ice tax is le!iable under section @@" of the Finance
ActD or
<4= taxable ser!ice whose art of !alue is exemted on the condition that no credit
of inuts and inut ser!ices, used for ro!iding such taxable ser!ice, shall be
takenD
but shall not include a ser!ice which is exorted in terms of rule @A of the /er!ice Tax
'ules, 633..

,f. A-95ise Tariff A5tA means the Central +xcise Tariff Act, 637? <? of 637@=D
,&. AFinan5e A5tA means the Finance Act, 633. <4( of 633.=D
,h. Afinal =rodu5tsA means excisable goods manufactured or roduced from inut, or
using inut ser!iceD
,ij. Afirst sta&e dealerA means a dealer, who urchases the goods directly from,C
<i= the manufacturer under the co!er of an in!oice issued in terms of the ro!isions of
Central +xcise 'ules, ())( or from the deot of the said manufacturer, or from
remises of the consignment agent of the said manufacturer or from any other
remises from where the goods are sold by or on behalf of the said manufacturer,
under co!er of an in!oiceD or
<ii= an imorter or from the deot of an imorter or from the remises of the
consignment agent of the imorter, under co!er of an in!oiceD
,n. Ajo' 8or*A means rocessing or working uon of raw material or semiCfinished goods
sulied to the job worker, so as to comlete a art or whole of the rocess resulting in the
manufacture or finishing of an article or any oeration which is essential for aforesaid
rocess and the Mexression Ljob workerL shall be construed accordinglyD
,naa. F3anufa5turerG or F=rodu5erG"
<i= in relation to articles of jewellery or other articles of recious metals falling under
heading 5664 or 566. as the case may be of the First /chedule to the +xcise Tariff
19
Act, includes a erson who is liable to ay duty of excise le!iable on such goods
under subCrule <6= of rule 6(AA of the Central +xcise 'ules, ())(D
<ii= in relation to goods falling under Chaters @6, @( or @4 of the First /chedule to the
+xcise Tariff Act, includes a erson who is liable to ay duty of excise le!iable on
such goods under subCrule <6A= of rule . of the Central +xcise 'ules, ())(DD
,o. Anotifi5ationA means the notification ublished in the Gfficial :a;etteD
,=. Aout=ut ser(i5eA means

any taxable ser!ice, excluding the taxable ser!ice referred to
in subCclause <;;= of clause <6)?= of section @? of the Finance Act, ro!ided by the
ro!ider of taxable ser!ice, to a customer, client, subscriber, olicy holder or any other
erson, as the case may be, and the exressions Nro!iderN and Nro!idedN shall be
construed accordinglyD
,E. A=erson lia'le for =ayin& ser(i5e ta9A has the meaning as assigned to it in clause <d= of
subCrule <6= of rule ( of the /er!ice Tax 'ules, 633.D
,r. A=ro(ider of ta9a'le ser(i5eA include a erson liable for aying ser!ice taxD
,s. Ase5ond sta&e dealerA means a dealer who urchases the goods from a first stage
dealerD

20

Rules ? to end in seEuen5e
Rule ? " Refund of C-#6AT Credit in 5ash
<6= A manufacturer who clears a final roduct or an intermediate roduct for exort
without ayment of duty under bond or letter of undertaking, or a ser!ice ro!ider who
ro!ides an outut ser!ice which is exorted without ayment of ser!ice tax, shall be
allowed refund of C+,-AT credit as determined by the following formula subject to
rocedure, safeguards, conditions and limitations, as may be secified by the "oard by
notification in the Gfficial :a;etteB
'efund amount O <+xort turno!er of goodsP +xort turno!er of ser!ices= x ,et C+,-AT credit
Total turno!er
1here,C
<A= FRefund a3ountG means the maximum refund that is admissibleD
<"= F#et C-#6AT 5reditG means total C+,-AT credit a!ailed on inuts and inut ser!ices
by the manufacturer or the outut ser!ice ro!ider reduced by the amount re!ersed in
terms of subCrule <?C= of rule 4, during the rele!ant eriodD
<C= F-9=ort turno(er of &oodsG means the !alue of final roducts and intermediate
roducts cleared during the rele!ant eriod and exorted without ayment of Central
+xcise duty under bond or letter of undertakingD
<D= F-9=ort turno(er of ser(i5esG means the !alue of the exort ser!ice calculated in the
following manner, namelyBC
+xort turno!er of ser!ices O ayments recei!ed during the rele!ant eriod for exort
ser!ices P exort ser!ices whose ro!ision has been comleted for which ayment had
been recei!ed in ad!ance in any eriod rior to the rele!ant eriod $ ad!ances recei!ed for
exort ser!ices for which the ro!ision of ser!ice has not been comleted during the
rele!ant eriodD
<+= FTotal turno(erG means sum total of the !alue of C
<a= all excisable goods cleared during the rele!ant eriod including exemted goods,
dutiable goods and excisable goods exortedD
<b= exort turno!er of ser!ices determined in terms of clause <D= of subCrule <6=
abo!e and the !alue of all other ser!ices, during the rele!ant eriodD and
<c= all inuts remo!ed as such under subCrule <?= of rule 4 against an in!oice, during
the eriod for which the claim is filed.
<(= This rule shall aly to exorts made on or after the 6st Aril, ()6(B
&ro!ided that the refund may be claimed under this rule, as existing, rior to the
commencement of the C+,-AT Credit <Third Amendment= 'ules, ()6(, within a eriod of
one year from such commencementB
21
&ro!ided further that no refund of credit shall be allowed if the manufacturer or ro!ider
of outut ser!ice a!ails of drawback allowed under the Customs and Central +xcise Duties
and /er!ice Tax Drawback 'ules, 633?, or claims rebate of duty under the Central +xcise
'ules, ())(, in resect of such dutyD or claims rebate of ser!ice tax under the /er!ice
Tax 'ules, 633. in resect of such tax.
+xlanation 6.C For the uroses of this rule,C
<6= Hexort ser!iceI means a ser!ice which is ro!ided as er rule @A of the /er!ice Tax
'ules 633., whether the ayment is recei!ed or notD
<(= Hrele!ant eriodI means the eriod for which the claim is filed.
+xlanation (.CFor the uroses of this rule, the !alue of ser!ices, shall be determined in
the same manner as the !alue for the uroses of subCrule <4= and <4A= of rule @ is
determined.
Rule ?A" Refund of C-#6AT 5redit to units in s=e5ified areas."
,otwithstanding anything contrary contained in these rules, where a manufacturer has
cleared final roducts in terms of notification of the :o!ernment of India in the %inistry
of Finance <Deartment of 'e!enue= ,o.()>())5CCentral +xcise, dated the (?th Aril,
())5 and is unable to utili;e the C+,-AT credit of duty taken on inuts re2uired for
manufacture of final roducts secified in the said notification, other than final roducts
which are exemt or subject to nil rate of duty, for ayment of duties of excise on said
final roducts, then the Central :o!ernment may allow the refund of such credit subject to
such rocedure, conditions and limitations, as may be secified by notification.
-9=lanation1 For the uroses of this rule, duty means the duties secified in subCrule <6=
of rule 4 of these rules.
Rule ?B " Refund of C-#6AT 5redit to ser(i5e =ro(iders =ro(idin& ser(i5es
ta9ed on re(erse 5har&e 'asis."
A ro!ider of ser!ice ro!iding ser!ices notified under subCsection <(= of section @7 of the
Finance Act and being unable to utilise the C+,-AT credit a!ailed on inuts and inut
ser!ices for ayment of ser!ice tax on such outut ser!ices, shall be allowed refund of such
unutilised C+,-AT credit subject to rocedure, safeguards, conditions and limitations, as
may be secified by the "oard by notification in the Gfficial :a;ette.
Rule 0 < !uty of assessee
An assessee cannot a!ail C+,-AT credit on caital goods, inuts and inut ser!ices which are
used exclusi!ely for exemted goods>exemted ser!ices.
1here assessee is using same 5a=ital &oods for exemted goods>exemted ser!ices
as well as dutiable goods and taxable ser!ices, the assessee is authorised to a!ail full
C+,-AT credit on caital goods.
22
1here an assessee is using same inuts and inut ser!ices for exemted goods>ser!ices as
well as dutiable goods and taxable ser!ices, the assessee is ha!ing following two otions $
<a= &ay @A of the !alue of exemted goods> exemted ser!icesD or
<b= %aintain searate record for utili;ation of inuts and inut
ser!ices which are utili;ed for exemted goods>exemted ser!ices and
dutiable goods>taxable ser!ices. If searate record is maintained, then no
credit will be a!ailable for the inuts and inut ser!ices used for exemted
goods>ser!icesD or
<c= %aintaining searate record is not ossibleD or
<d= Assessee may maintain searate record for utili;ation of inuts
but no searate record for inut ser!ices.
#o se=arate re5ord
The manufacturer of goods or the ro!ider of outut ser!ice shall, determine and ay,
ro!isionally, for e(ery 3onth,C
<i= the amount e2ui!alent to C+,-AT credit attributable to in=uts used in
or in relation to manufacture of e9e3=ted &oods, denoted as AD
<ii= the amount of C+,-AT credit attributable to inuts used for ro!ision
of exemted ser!ices <ro!isional=O <">C= multilied by D, where "
denotes the total !alue of exemted ser!ices ro!ided during the
receding financial year, C denotes the total !alue of dutiable goods
manufactured and remo!ed lus the total !alue of taxable ser!ices
ro!ided lus the total !alue of exemted ser!ices ro!ided, during the
receding financial year and D denotes total C+,-AT credit taken on
inuts during the month minus AD
<iii= the amount attributable to inut ser!ices used in or in relation to
manufacture of exemted goods and their clearance u to the lace of
remo!al or ro!ision of exemted ser!ices <ro!isional= O <+>F=
multilied by :, where + denotes total !alue of exemted ser!ices
ro!ided lus the total !alue of exemted goods manufactured and
remo!ed during the receding financial year, F denotes total !alue of
taxable and exemted ser!ices ro!ided, and total !alue of dutiable and
exemted goods manufactured and remo!ed, during the receding
financial year, and : denotes total C+,-AT credit taken on inut
ser!ices during the monthD
The manufacturer of goods or the ro!ider of outut ser!ice, shall determine finally the
amount of C+,-AT credit attributable to exemted goods and exemted ser!ices for the
whole finan5ial year in the following manner, namelyBC
<i= the amount of C+,-AT credit attributable to inuts used in or in
relation to manufacture of exemted goods, on the basis of total
23
2uantity of inuts used in or in relation to manufacture of said
exemted goods, denoted as 9D
<ii= the amount of C+,-AT credit attributable to inuts used for ro!ision
of exemted ser!ices O <J>K= multilied by 0, where J denotes the total
!alue of exemted ser!ices ro!ided during the financial year, K
denotes the total !alue of dutiable goods manufactured and remo!ed
lus the total !alue of taxable ser!ices ro!ided lus the total !alue of
exemted ser!ices ro!ided, during the financial year and 0 denotes
total C+,-AT credit taken on inuts during the financial year minus 9D
<iii= the amount attributable to inut ser!ices used in or in relation to
manufacture of exemted goods

and their clearance u to the lace of
remo!al or ro!ision of exemted ser!ices O <%>,= multilied by &,
where % denotes total !alue of exemted ser!ices ro!ided lus the
total !alue of exemted goods manufactured and remo!ed during the
financial year, , denotes total !alue of taxable and exemted ser!ices
ro!ided, and total !alue of dutiable and exemted goods manufactured
and remo!ed, during the financial year, and & denotes total C+,-AT
credit taken on inut ser!ices during the financial yearD
<d= the manufacturer of goods or the ro!ider of outut ser!ice, shall ay an amount
e2ual to the difference between the aggregate amount determined as er
condition <c= and the aggregate amount determined and aid as er condition <b=,
on or before the 4)
th
June of the succeeding financial year, where the amount
determined as er condition <c= is more than the amount aidD
<e= the manufacturer of goods or the ro!ider of outut ser!ice, shall, in addition to
the amount shortCaid, be liable to ay interest at the rate of twentyCfour er
cent. er annum from the due date, i.e., 4)
th
June till the date of ayment, where
the amount shortCaid is not aid within the said due dateD
<f= where the amount determined as er condition <c= is less than the amount
determined and aid as er condition <b=, the said manufacturer of goods or the
ro!ider of outut ser!ice may adjust the excess amount on his own, by taking
credit of such amountD
<g= the manufacturer of goods or the ro!ider of outut ser!ice shall intimate to the
jurisdictional /uerintendent of Central +xcise, within a eriod of fifteen days
from the date of ayment or adjustment, as er condition <d= and <f=
resecti!ely, the following articulars, namelyBC
<i= details of C+,-AT credit attributable to exemted goods and exemted
ser!ices, monthwise, for the whole financial year, determined
ro!isionally as er condition <b=,
<ii= C+,-AT credit attributable to exemted goods and exemted ser!ices
for the whole financial year, determined as er condition <c=
<iii= amount short aid determined as er condition <d=, alongwith the date
of ayment of the amount shortCaid,
<i!= interest ayable and aid, if any, on the amount shortCaid, determined
as er condition <e=, and
24
<!= credit taken on account of excess ayment, if any, determined as er
condition <f=D
<h= where the amount e2ui!alent to C+,-AT credit attributable to exemted goods
or exemted ser!ices cannot be determined ro!isionally, as rescribed in
condition <b=, due to reasons that no dutiable goods were manufactured and no
taxable ser!ice was ro!ided in the receding financial year, then the
manufacturer of goods or the ro!ider of outut ser!ice is not re2uired to
determine and ay such amount ro!isionally for each month, but shall determine
the C+,-AT credit attributable to exemted goods or exemted ser!ices for
the whole year as rescribed in condition <c= and ay the amount so calculated on
or before 4)th June of the succeeding financial year.
<i= where the amount determined under condition <h= is not aid within the said due
date, i.e., the 4)th June, the manufacturer of goods or the ro!ider of outut
ser!ice shall, in addition to the said amount, be liable to ay interest at the rate
of twenty four er cent. er annum from the due date till the date of ayment.
In=ut Ser(i5e !istri'utor
Rule 2,3. Ain=ut ser(i5e distri'utorA means an office of the manufacturer or
roducer of final roducts or ro!ider of outut ser!ice, which recei!es in!oices issued
under rule .A of the /er!ice Tax 'ules, 633. towards urchases of inut ser!ices and issues
in!oice, bill or, as the case may be, challan for the uroses of distributing the credit of
ser!ice tax aid on the said ser!ices to such manufacturer or roducer or ro!ider, as the
case may beD
Rule C < In=ut ser(i5e !istri'utor
+!ery office of a manufacturer>ser!ice ro!ider where in!oices in resect of inut ser!ices
issued under 'ule .A of the /er!ice Tax 'ules are recei!ed, can a!ail C+,-AT credit for
inut ser!ices ro!ided
6. The office is registered as Inut /er!ice Distributor, and
(. the inut ser!ices are not used exclusi!ely in relation to exemted goods>ser!ices.
The I/D is authorised to transfer the credit so a!ailed to another remises of the assessee
by issuing in!oice or challan subject to following condition $
a. The credit for ser!ices recei!ed in any articular remises shall be transferred to
that unit only.
b. If ser!ice is recei!ed in multile remises then credit shall be transferred in
roortion of turno!er of the unit during rele!ant eriod.
As er 'ule 3 of CC', the I/D is re2uired to file a half yearly return in resect of credit
taken and transferred within 4) days after the end of half year.
25
Rule CA"Transfer of 5redit of 5a=ital &oods and in=uts 'y ser(i5e =ro(ider
A ser!ice ro!ider is authorised to a!ail credit for caital goods, inuts and inut ser!ices.
Credit for inut ser!ices is transferable under 'ule 5 and credit for Caital :oods and
Inuts is also transferable from one remises of the ser!ice ro!ider to his another
remises.
Rule : < Stora&e of I#P/TS outside the fa5tory ,only for 3anufa5turer.
Due to shortage of sace in the factory or due to nature of the inuts the commissioner may
authorise an assessee for storage of inuts outside the factory in a registered remises and
to a!ail credit for such inuts in the factory.
If such authori;ation is gi!en, the remises where inuts are allowed to be stores shall be
treated as an extension of factory for the urose of C+,-AT credit.
Rule I < !o5u3ents for a(ailin& 5redit re5ords and returns
!o5u3ents < Credit can be a!ailed on the basis of following documents
-95ise Custo3 Ser(i5e Ta9
In!oice or
sulementary in!oice
issued by the
manufacturer or his
branch or deot or agent.
/ulementary in!oice
In!oice for remo!al of
caital goods>inuts
Challan
Assessed coy of "ill
of +ntry
In!oice issued by the
manufacturer or his
agent.
In!oice or
sulementary in!oice
issued by the ser!ice
ro!ider along with roof
of full ayment.
The document need not be original <but not a hotocoy=
The document need not be in the name of the assessee a!ailing credit.
If the rele!ant document is not ha!ing amount of duty or tax shown searately then credit
cannot be a!ailed.
If rele!ant document is lacking any re2uired information, other than the amount of duty or
tax, then credit can be a!ailed only with the rior aro!al of the Asst.>Dy. Commissioner.
Re5ords " +!ery assessee a!ailing credit as well as F/D>//D should maintain roer
records for all the goods rocured, C+,-AT credit a!ailed and utili;ed. In case of
F/D>//D, he may be rohibited from transferring credit to the customers.
26
Returns < Qnder the C+,-AT Credit 'ules, an assessee is re2uired to file the following
returns
Manufa5turer FS!/SS! IS! Ser(i5e Pro(ider
A!ailing
-alue "ased
+xemtion
Gthers
Ruarterly %onthly Ruarterly 9alf
*early
9alf yearly
1ithin 6)
days
1ithin 6)
days
1ithin 6?
days
1ithin 4)
days
1ithin one month.
9e is also
authorised to file
re!ised return
within 3) days.
Rule $0 < Transfer of C-#6AT 5redit
Qnutilised accumulated amount of C+,-AT credit is transferable only under the following
circumstances $
a. /hifting of location of the remises or change of remises of the ser!ice ro!ider
b. %erger or amalgamation
c. Change of ownershi of business
Transfer of credit is subject to the following conditions $
a. All the liabilities of business are also transferred
b. All the goods in stock are transferred
c. The AC>DC is satisfied that aforesaid both the conditions ha!e been fulfilled.
Rule $$ < Transition =ro(isions To 'e read 8ith Rule 3,2. and 3,3.
1here an assessee is a!ailing !alue based exemtion, during exemtion eriod he is entitled
for C+,-AT credit on caital goods but not inuts and inut ser!ices. 1hen exemtion
comes to end, the assessee becomes entitled to $
a. utili;e credit a!ailed on caital goods
b. a!ail credit on inuts lying in stock as inuts or material in rocess or as finished
goods
c. ,o credit for inut ser!ices recei!ed during exemtion eriod.
/imilarly, where an assessee becomes entitled to a!ail !alue based exemtion on change of
financial year $
a. Qnutilised credit of caital goods will be carried forward
b. Qnutilised credit for inut ser!ices will lase
27
c. Credit for inuts lying in stock as inut or material in rocess or as finished goods will
ha!e to be re!ersed and if there is any surlus, it will lase.
>uestion " J a(ailed Cen(at 5redit of Rs. 42000 for 3anufa5ture of an ite3
5har&ea'le to duty. These &oods 8ere lyin& in his fa5tory till 2:"02"200I fro3
$.3.200IK the final =rodu5t 8as 3ade e9e3=t fro3 duty. #o8 8hen the final &oods
are 5leared should the C-#6AT 5redit of Rs. 42000 a(ailed earlier 'e re(ersed@
AnswerB As er C+,-AT Credit 'ule 66 <4= when dutiable goods becomes exemt, C+,-AT
credit a!ailed on inuts, workCin rocess and finished goods should be re!ersed. 9ence F has
to re!erse an amount of 's. .()))>C of credit a!ailed.
Rule $2 < S=e5ial =ro(isions for #orth -ast States %a33u and Hash3ir Hut5h
distri5t of +ujarat
All the goods manufactured in these areas ha!e been exemted from duty liability under
!arious ro!isions. If any erson, outside these area, makes use of the goods manufactured
in these areas as inuts, he is entitled to a!ail C+,-AT credit as if goods are not exemt.
7ar&e Ta9 Payer and 7T/
Rule 2,na. Alar&e ta9=ayerA shall ha!e the meaning assigned to it in the Central +xcise
'ules, ())(
Rule $2A < 7ar&e Ta9=ayer unit
For the urose of Central +xcise and ser!ice tax, a large tax ayer means an assessee $
a. 9a!ing a ermanent account number allotted under the Income Tax ActD
b. 9a!ing one or more remises registered under the Act
c. Fulfilling other criteria laid down for the urose i.e.
i. 9e has aid income tax for the receding financial year or ad!ance tax for
the current financial year not less than 's. 6).) CrD or
ii. 9e has aid excise duty or ser!ice tax for the receding financial year, only
in cash i.e. other than C+,-AT credit, not less than 's. ?.)) cr
For the large tax ayers, the central go!ernment has offered a centralised facility for
assessment of income tax, ser!ice tax and central excise duty. The facility is otional for
the assessee. The office for centralised assessment is called as 0TQ.
A 0T& willing to come under 0TQ is re2uired to make an alication to the Commissioner
ha!ing jurisdiction o!er 0TQ and, if acceted, the assessee will be assessed, thereafter, at
0TQ only and the regional officers will not ha!e any jurisdiction on any remises situated in
their jurisdiction.
28
+!ery remises of the assessee is re2uired to be registered searately, returns are also
re2uired to be filed searately but assessment is centralised.
An assessee in 0TQ is also authorised to a!ail credit of inuts in a remises and transfer the
same either as such or after rocessing to another unit without ayment of duty or re!ersal
of credit. In such a case, the goods shall be remo!ed from the reciient remises within @
months.
As assessee may come out of 0TQ jurisdiction by making another alication to the
Commissioner of 0TQ, at least 4) days before the end of financial year.
Rule $2AA < Po8er to i3=ose restri5tions
1ith a !iew to ensure that any erson>assessee does not misuse ro!isions related to
C+,-AT credit, the Central :o!ernment may, by issuing a notification, secify certain
restrictions that may be imosed on a manufacturer, first stage and second stage dealer or
an exorter. The restrictions may also include CC restrictions on utili;ation of C+,-AT
credit and susension of registration in case of a dealer and tye of facilities to be
withdrawn. The C"+C may also secify the rocedure for assing such order.

Rule $3 < !ee3ed C-#6AT 5redit
The Central go!ernment may declare certain inuts and inut ser!ices on which an assessee is
authorised to a!ail C+,-AT credit at a rate secified by the Central :o!ernment
irresecti!e of actual rate alicable. This shall be subject to such terms and conditions as
may be secified by the Central :o!ernment in the notification.

Rule $4 < Re5o(ery of C-#6AT 5redit
'eco!ery ro!isions of section 66 of the Central +xcise Act and>or /ection 75 of the Finance
Act, 633. will be alicable where the C+,-AT credit has been ta*en and utiliLed wrongly
or has been erroneously refunded. The amount shall be reco!ered along with interest.
Rule $? < Penalty
1rongly a!ailing or utili;ing credit
<Qnintentional=
1rongly a!ailing or utili;ing credit due to
fraud, misreresentation etc.
<Intentional=
:oods are liable to confiscation
Fine uto 's. ())) or amount of duty or
ser!ice tax, whiche!er is more
a. :oods are liable to confiscation
b. &enalty as er section 66AC of the Central
+xcise ActD and>or
c. &enalty under section 57 of the Finance
Act, 633.
,o enalty unless rule of natural justice has been followed.
29
Rule $?A < +eneral Penalty
For contra!ention of any of the ro!isions of the 'ules for which no secific enalty is
rescribed, there is a fine uto 's. ?)))>C
Rule $0 < Transition
<6= Any notification, circular, instruction, standing order, trade notice or other order issued
under the C+,-AT Credit 'ules, ())( or the /er!ice Tax Credit 'ules, ())(, by the Central
:o!ernment, the Central "oard of +xcise and Customs, the Chief Commissioner of Central
+xcise or the Commissioner of Central +xcise, and in force at the commencement of these
rules, shall, to the extent it is rele!ant and consistent with these rules, be deemed to be
!alid and issued under the corresonding ro!isions of these rules.
<(= 'eferences in any rule, notification, circular, instruction, standing order, trade notice or
other order to the C+,-AT Credit 'ules, ())( and any ro!ision thereof or, as the case may
be, the /er!ice Tax Credit 'ules, ())( and any ro!ision thereof shall, on the
commencement of these rules, be construed as references to the C+,-AT Credit 'ules,
()). and any corresonding ro!ision thereof.
30
A(aila'ility of C-#6AT 5redit under (arious situations
Situation Solution
a. The inuts are rocured from a
registered First stage dealer under the
co!er of in!oice in which amount of duty
shown is 's. 64,())>C. The In!oice was
marked EG'I:I,A0 FG' "Q*+'#.
As er 'ule 3, C+,-AT credit can be
a!ailed on the basis of in!oice issued by
registered First /tage Dealer, for the
amount of duty shown therein. In the
gi!en case Cen!at credit is a!ailable for
's. 64,()).
b. %achinery falling under chater heading
7. recei!ed along with in!oice marked
EDQ&0ICAT+ FG' T'A,/&G'T#
indicating the amount of duty 's. 5,@)).
assume that the amount shown includes
+C as well as /9+C
According to 'ule (<a= %achinery
falling under chater 7. are the Caital
:oods. As er 'ule .<(=, CC on caital
goods can be a!ailed uto ?)A of the
amount of duty during the first
Financial year in which goods are
recei!ed and balance can be a!ailed in
any of the subse2uent financial years.
Therefore, in the gi!en case amount of
credit during the first financial year
cannot exceed 's. 4,7)) <?)A= and
balance can be a!ailed in any
subse2uent financial year.
c. /ome inuts were directly sent on 6st of
the month for job work to the factory of
job worker, from lace of the inut
sulier, without bringing them in
factory. As er the in!oice of sulier of
inuts, duty aid on inuts was 's. ?,))).
Gut of these inuts, 7)A were recei!ed
in the factory on 6.th of the month,
after carrying out job work.
According to 'ule .<6=, C+,-AT credit
on inuts can be recei!ed only when
inuts are recei!ed in the factory, for
the 2uantity actually recei!ed. In the
gi!en case, the assessee can a!ail the
credit for 's. .))) <7)A= when inuts
are recei!ed in the factory along with
documents, referred under rule 3,
showing amount of duty.
d. /ome sare arts of machinery falling
under chater 7. recei!ed with in!oice
indicating amount of duty 's. 6,@))>C.
The In!oice was marked EDQ&0ICAT+
FG' T'A,/&G'T.
According to 'ule (<a=, sare arts of
%achinery falling under chater 7. are
the Caital :oods. As er 'ule .<(=, CC
on caital goods can be a!ailed uto
?)A of the amount of duty during the
first Financial year in which goods are
recei!ed and balance can be a!ailed in
any of the subse2uent financial years.
Therefore, in the gi!en case amount of
credit during the first financial year
cannot exceed 's. 7)) <?)A= and
balance can be a!ailed in any
subse2uent financial year.
e. /ome Inuts recei!ed under the co!er of
in!oice indicating amount of duty 's.
According to 'ule 3<(= of the CC', if
there is any defect in in!oice, Cen!at
31
.,?))>C. The In!oice was marked
EDQ&0ICAT+ FG' T'A,/&G'T# and it
did not contain time of remo!al from the
factory.
credit can be a!ailed only with
ermission of AC>DC.
In the gi!en case, failure to mention
time of remo!al on the in!oice is a
defect. Therefore, CC cannot be
a!ailed excet with the rior aro!al
of AC>DC.
If such aro!al is obtained then CC
will be a!ailable for 's. .?))>C
f. Assessee recei!ed some inuts are the
co!er of an in!oice. The in!oice is not in
the name of assessee.

According to 'ule 3<6=, C+,-AT credit
can be a!ailed on the basis of certain
secified documents. The rule does not
re2uire that the in!oice should be in
the name of the assessee. Therefore,
assessee can a!ail the CC on the basis
of in!oice e!en though it is not in his
name ro!ided goods are in his
ossession.
g. An consignment of imorted inuts was
recei!ed !ide "ill of +ntry showing
ayment of following duties $ "CD C 's.
6,))), C-D C 's. 6,5@), /ecial C-D 's.
?6? and alicable +CP/9+C.
According to 'ule 4<6= of CC', CC is not
a!ailable for "CD but it is a!ailable for
CC
6. C-D C 's. 6,5@)
(. /l C-D $ 's. ?6?
h. A consignment of 6,))) Kg of inuts was
recei!ed. The excise duty aid was er
in!oice was 's. 6),))). 1hile the inuts
were being unloaded, ?) Kgs were
damaged and it was found that these
were not usable.
According to 'ule (<k=, Inuts are the
goods which are used in the factory. If
the material is recei!ed but it cannot
be used, then it cannot termed as Inut
and CC cannot a!ailed on unusable
material.
In the gi!en case, ?) Kgs of inuts are
not usable. Therefore, credit can be
a!ailed for 3?) Kgs only i.e. 's. 3,?)).
i. /ome inuts were recei!ed along with
hoto coy of the In!oice. The original or
dulicate coy of In!oice was not
traceable.
Cen!at credit cannot be taken on basis
of hoto coy. If assessee can rocure
trilicate coy <a!ailable with sulier=,
then he can a!ail Cen!at credit.
j. ?)) ieces of inuts were recei!ed. duty
aid on these goods was 's. (,?)). These
were issued to roduction. 1hile on
roduction line, a fire broke out and ())
C+,-AT credit is a!ailable for all the
inuts used in the factory e!en if those
are destroyed during the rocess of
manufacture. In the gi!en case re!ersal
32
ieces of inuts lying on sho floor were
destroyed.
of credit is not re2uired because once
the inuts are on roduction line, those
are considered to be used in
manufacture.
k. 6))) litres of inuts were recei!ed on
which duty aid was 's. 6),))). Gut of
these, 3?) litres of final roducts were
manufactured. ?) litres of inuts were
lost during the rocess of manufacture
/ame as abo!e
l. /ome inuts were recei!ed on which duty
aid was 's. (),))). Assessee used @)A
of the inuts but balance .)A could not
be used due to change in design. 9e made
ro!ision for Eobsolete goods written off#
in his books of account. 9owe!er, the
inuts were still in his store room.
According to rule 4<?"= if inuts are
written off in the books of account or a
ro!ision is made to write off, before
inuts are ut to use, then the CC
a!ailed on the inuts shall be re!ersed.
Therefore, in the gi!en case, the
assessee is re2uired to re!erse 's.
7,))) <.)A of the total credit on
inuts=.
The rule further ro!ides that if such
inuts are used again then assessee can
a!ail CC again.
m. Cen!at credit of 's. 6),))) was taken on
some inuts. These were ne!er used and
later sold as scra for 's. 6?,))). +xcise
duty ayable on scra is 6@..7A.
In this case, the assessee will ha!e to
re!erse Cen!at credit of 's. 6),))).
'ule 4<?=
33
Pra5ti5al Pro'le3s in C-#6AT Credit

#ote1 In many 2uestion education cess has and /9+C has not been mentioned. *ou should
assume that +C and /9+C is also aid in addition to the amount of duty.
Pro'le3 #o $
An assessee was a!ailing //I exemtion from 6C.C()6(. 9e crossed turno!er Ps. 6?) lakhs
on 6?C66C ()6( and started ayment of excise duty. 9e had recei!ed machinery on 6)C66C
())7 one which excise duty aid was 's. 4,(),))). 9e intends to a!ail Cen!at credit of this
duty. Can he do soS
Solution
According to 'ule .<(=, an assessee a!ailing //I exemtion is entitled to a!ailed 6))A
C+,-AT credit on caital goods during the financial year in which those goods are recei!ed.
C+,-AT credit is a!ailable on caital goods irresecti!e of the fact that the assessee is
a!ailing //I exemtion. This credit can be used by the assessee only after his exemtion
limit is exhausted.
In the gi!en case, Caital goods are recei!ed during exemtion eriod. Therefore, the
assessee can a!ail 6))A C+,-AT credit during the same financial year.
Pro'le3 #o 2
<6= The assessee recei!ed ?)) ieces of inuts on which duty of 's. (?))>C has been aid.
1hile on roduction line, a fire broke out and ()) ieces of inuts lying on the sho floor
were destroyed.
<(= 6))) litres of oil, an inut, was recei!ed on which duty of 's. 67,))) has been aid. @)
liters of oil has been lost during the rocess of manufacture.
Discuss a!ailability of C+,-AT credit in both of these cases.
Solution
<6= %aterial destroyed before being used does not 2ualify to be inut. Therefore, C+,-AT
credit a!ailed on ?)) units destroyed due to file shall be re!ersed>aid back by the
assessee.
<(= All the material used in the factory is said to be inut. @) liters of oil lost during the
rocess of manufacture is said to ha!e been used. Therefore, C+,-AT credit is admissible
for entire 6))) liters.
34
Pro'le3 #o. 3
+xamine the !alidity of the following statementsB
<i= &urchased a lant for 's. 6,6@,.7) cumCduty rice. +xcise duty rate 6@..7A on
6(.6(.()66 and recei!ed the lant into the factory on ?...()6(. Cen!at allowed will
be only 's. 7,(.) for the year ended on 4 6.4.()6(.
<ii= An assessee urchased inuts weighting .)) tons. The duty aid on inuts was 's.
.),))). During transit, () tons of the inuts were destroyed. The destroyed
2uantity of inuts does not 2ualify to be Einuts# within the meaning of Cen!at
Credit 'ules, ())..
Ans8er
<6= As er 'ule .<(=, CC on caital goods can be a!ailed on being recei!ed in the factory and
not on the date of urchase. In the gi!en case, the goods are urchased on 6(.6(.()66 but
those are recei!ed on )?.)(.()6(. Therefore credit cannot be a!ailed before ?.)..()6(. In
other words, no C+,-AT credit is admissible during the financial year ()66C6(.
During financial year ()6(C64 also C+,-AT credit is limited to ?)A i.e. 's. 7(.) and
balance credit can be a!ailed during any of the subse2uent financial years.
<(= The statement is correct. It is to be noted that the material destroyed before being ut
to use in the factory does not 2ualify to be inut and, thus, CC is not admissible on the
2uantity so lost.
Pro'le3 #o 4
A manufacturer rocures certain inuts for 's. 6,)),))) and duty 's. 6@,))) P+CP/9+C. As
soon as he recei!es the inuts, he a!ailed C+,-AT credit.
/ince he does not re2uire these inuts any more, he sells those for 's. 6,4),))) <lum sum=.
+xamine the amount of duty ayable by the assessee if
<a= Gn the date of clearance, duty rate on inuts was ()A
<b= Gn the date of clearance, duty rate on inuts was 6)A.
Solution1
According to 'ule 4<?= of the C+,-AT Credit when inuts are remo!ed Eas such,# the
assessee is re2uired to re!erse or ay back the amount of C+,-AT credit taken by the
assessee. Therefore, in the gi!en case, the assessee need not ay any duty but he shall
re!erse the C+,-AT credit taken by him on inuts.
It is to be noted that while making re!ersal, change in !alue as well as in rate of duty
becomes immaterial.
It is also rele!ant to note that the re!ersal is re2uired to be made immediately on remo!al of
goods. In case of re!ersal facility of making ayment of duty on monthly or 2uarterly basis
does not aly.

35
Si3ilar su3 for =ra5ti5e
An assessee had rocured some inuts in %ay ()6( for 's. () lakhs and aid duty of 's.
4,(),))) < 8 6@A= lus education cess of 's. @,.)). 9e was unable to use the inuts in !iew
of change in market conditions. 9e sold the inuts in %arch ()64 for 's. 6@,)),))). 9ow
much Eduty# or Eamount# is ayable while clearing the inutsS
Pro'le3 #o. ?
%>s A0% imorted some inuts and aid "asic Customs duty Rs. ? lakhs, surcharge on
customs duty 's. ?),))) and ACD 's. 6 lakh. Calculate the amount that he can claim as Cen!at
credit. 1ould it make any difference, if the assessee is not a manufacturer, but a ser!ice
ro!ider <CA Final %ay ())@=
Ans8er
As er 'ule 4<6= of the Cen!at Credit 'ules, ())., C+,-AT credit is not a!ailable for "asic
Custom Duty as well as for any /urcharge thereon. It is a!ailable only for Additional Custom
duty aid under section 4<6= of the Custom Tariff Act.
A ser!ice ro!ider can a!ail credit only if the imorted goods are used by him as inut for
ro!iding outut ser!ice.
Pro'le3 #o. 0
"ased on the following information, determine the C+,-AT Credit a!ailable for use in the
current year under the C+,-AT Credit 'ules, ()).
Amount after each item indicates Central +xcise duty aid at the time of &urchase of goods.
+C and /9+C is in addition to the amount of duty
,Rs.. $
<a= &ollution control e2uiments C 's (?,)))
<b= /ares for ollution control e2uiments C 's ?,)))
<c= +2uiments used in office C 's 6(,)))
<d= /torage Tank C 's 6),)))
<e= &aints used for ainting machinery used C 's @,)))
<f= &acking material C 's .,)))
<g= 0ubricating oils C 's 7,)))
<h= 9igh /eed diesel oil C 's 5,)))

36
Ans8er1
Parti5ulars
of
&oods
#ature
of
+oods
!uty
=aid
-du5ation
Cess
Cen(at
Credit
-li&i'le in
Current year
Reason Re3ar*s
&ollution
Control
+2uiments
Caital
goods
(?))) 5?) 6(?)) 45? C+,-AT credit is limited to ?)A
/ares for
&ollution
control
+2uiment
Caital
goods
?))) 6?) (?)) 5? C+,-AT credit is limited to ?)A
+2uiment
used in
office
,ot a
Caital
goods
6())) 4@) ,il ,il
Credit is not a!ailable for the
goods used in office.
/torage
Tank
Caital
goods
6)))) 4)) ?))) 6?) C+,-AT credit is limited to ?)A
&aints used
for
ainting
%achinery
Inuts @))) 67) @))) 67) 6))A Credit is a!ailable on Inuts
&acking
%aterial
Inuts .))) 6() .))) 6() 6))A Credit is a!ailable on Inuts
0ubricating
Gils
Inuts 7))) (.) 7))) (.) 6))A Credit is a!ailable on Inuts
9igh seed
diesel
,ot a
Inut
5))) (6) nil ,o C+,-AT Credit.
Total Credit a!ailable in Current year 47))) 66.)
Pro'le3 #o. C
Discuss about the eligibility of C+,-AT Credit in each of the following situations $
(i) 6))) kgs of raw materials were urchased on which duty of 's. 6@,))) was aid.
1hilst in the roduction yard those goods were destroyed by accidental fire.
(ii) 6))) kgs of raw materials on which duty aid was 's. 6),))) was used in manufacture
of a final roduct for which the duty ayable is 's. 7)))
37
(iii) The original in!oice for 6,))) units of inuts urchased were missingD howe!er
Edulicate for transort# coy of in!oice is a!ailable, which shows that duty of 's.
6),))) had been aid on inuts
Ans8er
<i= Credit is a!ailable on inuts only when used in manufacture. If inuts are destroyed
before being used in the rocess of manufacture, C+,-AT credit already a!ailed
shall be re!ersed or aid back. In other words, in the gi!en case, C+,-AT credit is
not a!ailable.
<ii= If finished goods are dutiable then full C+,-AT credit is a!ailable on inuts. It is
immaterial that the amount of duty aid on inut is higher than the duty ayable on
the finished goods. Therefore, in the gi!en case, credit is a!ailable for 's. 6),))) out
of which 's. 7,))) shall be utili;ed to ay duty on finished goods and balance 's.
(,))) shall be carried forward.
<iii= As er rule 3 of the CC', C+,-AT credit can be a!ailed on the basis of certain
secified documents only. 'ule 3 does not re2uire only original coy for a!ailing the
credit. As long as all the articulars are a!ailable on the transorters coy, credit
can be a!ailed.
Pro'le3 #o. I
9 0td. urchased a "oringCbrilling machine at a cumCduty rice of 's. 4(,6.,.5@. The +xcise
duty rate charged on the said machine was 8 6@A P+CP/9+C. The machine was urchased on
)6.)..()66 and disosed of on 4).)3.()6( for a rice of 's. 6( lakhs. The comany was
claiming dereciation 8 (?A following /traight 0ine %ethod. Qsing the said information,
answer the following 2uestionsB
<i= what is the +xcise duty aid on the machineS
<ii= 1hat is the Cen!at credit allowable under Cen!at 'ulesS
<iii= 1hat is the amount of Cen!at credit re!ersible or duty ayable at the time of clearance
of the said machinery
Solution
6. According to 'ule .<.=, the assessee can either claim dereciation on the amount
of duty or C+,-AT credit.
(. The assessee is always authorised to claim dereciation for the !alue of goods
excluding amount of duty for which C+,-AT credit is claimed. This dereciation on the
!alue of goods does not affect right of the assessee to claim C+,-AT credit for the
amount of duty aid on machine.
4. According to 'ule .<(=, C+,-AT credit on caital goods is limited to ?)A during
first financial year in which goods are recei!ed and balance credit can be a!ailed in any of
the subse2uent financial years.
38
.. According to 'ule 4<?A=, if goods are remo!ed after artial use, the assessee is
entitled to retain (.?A of the total credit for e!ery three months or art thereof and
balance credit shall be re!ersed.
Calculation of +xcise duty, C+,-AT credit and re!ersal
Cum duty rice 4(,6.,.5@
Assessable -alue 4(6..5@ x 6))>66@..7 (5,?3,@76
+xcise duty including +C and /9+C 4A of duty .,?.,53?
A(aila'ility of Cen(at 5redit
During first year C?)A of 's. .?.53? (,(5,437
During subse2uent year $ remaining ?)A Gf 's. .?.53? (,(5,435
Credit of -C a!ailable only on ayment of +C
Cen(at 5redit re(ersi'le at the ti3e of 5learan5e
Cen!at Credit a!ailed in year 66C6( 's. (,(5,437
0essB (.?A er 2uarter for @ 2uartersC6?A 4..6) 6,34,(77
Cen!at Credit a!ailed in year 6(C64 (,(5,435
0ess B (.?A er 2uarter for ( 2uarters 66456 (,6@,)(5
Total amount of C+,-AT credit re!ersible > ayable at the time of clearance .,)3,46?
Pro'le3 for Pra5ti5e
6. An assessee had rocured machinery in Aril ()66 for 's 6) lakhs by aying duty of 's
6,@),))). It was commissioned in June ()66. Assessee had a!ailed ?)A Cen!at credit of 's
7),))) in ())66C6(, and 's 7),))) <balance ?)A credit= in ()6(C64. 9e sold the caital
goods after use, on 6)
th
Aril (6)4 as second hand goods for 's 4,)),))). 9ow much excise
duty or Eamount# is ayable while clearing the machineryS
(. %achinotech 0td. urchased a lathe machine at a rice of 's. 6,)),))) on which 6@A
+xcise duty was aid and the comany a!ailed of the Cen!at credit on the said caital
goods. The lathe machine was urchased on (5C)6C()6) and it was disosed of on (3C).C
()66. 9ow much C+,-AT credit and when it can be a!ailed by the assessee. Is it necessary
to re!erse the cen!at credit on disosal of the machineS If your answer is yes, 2uantify
the amount.
39
Pro'le3 #o. $0
QT- 0imited manufactures 6),))) units of &roduct EA# ha!ing assessable !alue of 's. .))>C
er unit attracting duty of 's. 6@>C er unit <all inclusi!e=. QT- 0imited has aid duty of
's. 4,)),))) on inuts. Gut of 6),))) units manufactured by QT- 0imited, (,))) units are
sold in India and remaining 7,))) are exorted. "ased on these fact, answer the following
2uestions $
(i) 1hat is C+,-AT credit a!ailableS
(ii) 1hat is the duty ayable through ersonal ledger account <&0A=S
(iii) Can QT- 0td. get any refund of C+,-AT creditS
Ans8er1
<i= C+,-AT credit is a!ailable for the inuts used in manufacture of dutiable goods.
+xort goods are also dutiable if sold in India but articular transaction of exort is
exemt. +xort goods cannot be referred as exemted goods. Therefore, credit is
a!ailable e!en for the inuts used in manufacture of exort goods.
In the gi!en credit the assessee is entitled to get credit of 's. 4,)),))) i.e. duty
aid on inuts.
<ii= Duty is ayable only on the goods remo!ed within India. The assessee is re2uired
to ay duty on ())) units 8 's. 6@>C er unit i.e. 's. 4(,))). The assessee is ha!ing
sufficient credit balance, therefore nothing is ayable through &0A <cash=.
<iii= *es, the assessee is entitled for refund. According to 'ule ? of CC', the assessee
is entitled to get refund of C+,-AT credit a!ailed on inuts used in manufacture of
exort goods in accordance with the rescribed formula.

A manufacturer manufactures 6,))) units of roduct E&# ha!ing a, Assessable -alue of which
is 's. (,))) er iece. Duty ayable is ()A.
Duty aid on raw materials is 's. (,)),)))P+CP/9+C. The manufacturer sells 5)) ieces in
India and 4)) ieces are exorted. 1hat is C+,-AT a!ailable and what is the duty ayable
through &0AS
Pro'le3 #o. $$
%Is Tis and Toes 0d., manufactures four tyes of H,ail &olishesI, namely /weety, &retty,
"eauty, Tweety. The comany has a!ailed C+,-AT credit of 's. .,)),))) on the common
inuts used in the manufacture of E,ail &olishes# during the financial year ()66C6( the
comany manufactured 6))) litres of each tye of ,ail &olishesI. The C+,-AT a!ailed inut
was used in e2ual roortion in all the four tyes of the roducts. +xamine the a!ailability of
Cen!at Credit and duty ayable
&roduct ,ature of /ale /ale &rice excluding /ales Tax T
40
other local taxes
/weety /ale to 9ome Consumtion 's. 4) er () ml bottle
&retty /old to a $00D +GQ 's. .) er () ml bottle
"eauty Fully exorted 's. ?) er () ml bottle
Tweety /ulied to defence Canteen under exemtion 's. @) er () ml bottle
Solution
The assessee is authorised to a!ail full C+,-AT credit for the inuts used in manufacture of
the goods which are remo!ed for
6. 9ome consumtion
(. +xort
4. /ulied to 6))A +GQ
In resect of goods sulied to defence canteen, the assessee is ha!ing following otions $
$. If assessee is maintaining searate record for use of inuts used in manufacture of
!arious articles, then C+,-AT credit cannot be a!ailed on the inuts used in manufacture of
goods sulied to defence canteen or
2. Gn remo!al of goods to defence canteen duty can be aid 8 @A or
3. C+,-AT credit a!ailed on inuts used in manufacture of goods sulied to defence can be
re!ersed in accordance with the formula rescribed under rule @<4A=.

Pro'le3 #o $2
An assessee cleared his manufactured final &roduct during the month of January ()64. The
duty ayable on the final roduct for the month is $
"asic excise duty 's. .7,))),
,CCD 's.())) and alicable education cess.
During the month he has recei!ed !arious inuts total duty aid on the inuts was as follows.
"asic +xcise duty 's. .)))),
/ecial excise duty .))),
/er!ice tax aid on inut ser!ices 's. 7))).
Alicable education cess and /9+C was also aid. 9ow much duty is ayable through
account current
41
Solution
B-! S-! #CC! Ser(i5e
Ta9
-C and
SB-C
Total
Credit
a(aila'le
.),))) .,))) 7))) 6,@)) ?4,@))
!uty
=aya'le
.7,))) ())) 6?)) ?6?))
"+D can be aid
out of credit of
"+D, /+D as well
as /T. There is
surlus credit of
's. .,))).
#CC! is
=aya'le only
in 5ash or out
of #CC!
5redit. Sin5e
there is no
5redit for
#CC! then it
is =aya'le in
5ash only
This
credit can
be used
to ay
"+D,
/+D, +C,
/9+C
Credit
exceeds
the
liability.
Therefore,
excess
credit can
be carried
forward
An assessee cleared his manufactured final &roduct during the month of %arch ()64. The
duty ayable on the final roduct for the month is $
"asic excise duty 's. ())))),
/ecial excise duty 's. 6,)),))) and alicable education cess.
During the month he has recei!ed !arious inuts total duty aid on the inuts was as follows
CC
"asic +xcise duty 's. ?)))),
/ecial +xcise duty is 's. ?))).
+xcise duty aid on caital goods recei!ed during the month was 's. 6()))
/er!ice tax aid on inuts 's. 6))),
Alicable +C and /9+C was also aid. 9ow much duty is ayable through account current

Pro'le3 #o $3
F a!ailed Cen!at credit of 's. .(,))) for manufacture of an item chargeable to duty. These
goods were lying in his factory till (3C)(C()64. From 6.4.()64 the final roduct was made
exemt from duty. 1hat is the resonsibility of assessee in resect of C+,-AT credit.
Solution
According to 'ule 66 of CC', if finished goods become exemt, the assessee shall re!erse CC
for all the inuts lying in stock as well as inuts contained in the finished goods in stock.
In the gi!en case, all the finished goods are in stock when dutiable goods become exemt.
Therefore, the assessee is re2uired to make re!ersal of C+,-AT credit of 's. .(,))).

42
Pro'le3 #o $4
A manufacturer recei!ed certain inuts. The cost of inuts was 's. (,)),))) and duty aid 8
6@A was 's. 4(,))). After receit of the inuts, the cen!at credit was a!ailed of by the
manufacturer. 9e further carried out some rocesses on the inuts. The cost of rocessing
was 's. ?),))). The semiCrocessed material was sent to a smallCscale unit for a job work.
CIs there any duty ayable at the time of remo!al of inuts for the job workS The material
sent was not returned by the smallC scale unit after the job work within 67) days. 1hat will
be the duty ayable on such goods not returned after being sent out for the job workS
Solution
According to 'ule .<@= of the CC', if inuts or semiCfinished goods are sent for job work
without aying duty and if those are not returned within 67) days, the assessee is re2uired
to make re!ersal of the C+,-AT credit on the inuts>inuts used in semi finished goods for
the jobCwork.
In the gi!en case, if goods are not returned within 67) days since remo!al for jobCwork, the
assessee is re2uired to make re!ersal of the credit a!ailed. 9owe!er, secial ermission can
also be obtained for remo!al of finished goods from the remises of jobCworker and in that
case, duty will be ayable on assessable !alue of finished goods.

Pro'le3 #o $?
A /mall /cale Industrial unit <//I= is re2uired to ay the following central excise duties
by January 6), ()64 for clearances effected from its factory in resect of final roducts
manufactured during the month of December, ()6(B
"asic +xcise Duty <".+.D.=B 's.4@,)))
/ecial +xcise Duty </.+.D.=B 's.67,)))
,ational Calamity Contingency Duty <,.C.C.D.=B 's.6,)))
+C and /9+C as alicable
"alances a!ailable as credit at the beginning of the month i.e. December, ()6( were as
followsB
"+D 's. (.,)))
,.C.C.D. 's. (,)))
+.C. 's. 57)
,o inuts were recei!ed during the month. 9owe!er, certain inuts were recei!ed on
January 6, ()64 on which total duty aid by the suliers of inuts was as followsB
".+.D 's.6@))),
+.C. and /.9.+.C 's..7)
+xcise duty aid on caital goods recei!ed during the month was as followsB
".+.D. 's..),))),
+.C. and /9+C 's.6())
For the month of December, ()6( you are re2uired to determineB
<i= the credit a!ailable for utili;ationD
<ii= the ermissible extent to which such a!ailable credit may be utilised against
ayment of ".+.D.,/.+.D., ,.C.C.D., and +.C.D and
43
<iii= The ".+.D., /.+.D., and +.C. ayable through account current <&.0.A.=.
Solution
C-#6AT 5redit a(aila'le for utiliLation
-95ise S-! #CC! -C SB-C Total
)=enin&
'alan5e
(.,))) C (,))) ?() (@) (@,57)
In=uts
re5ei(ed in
!e5e3'er
2$03
C C C C C C
Ca=ital
+oods
re5ei(ed in
!e5e3'er
20$2
(),))) .)) ()) (),@))
Total ..,))) C (,))) 3() .@) .5,47)
-95ise S-! #CC! -C SB-C Total
!uty
=aya'le
4@,))) 67,))) 6,))) 66)) ??) ?@,@?)
Credit
a(aila'le
..,))) (,))) 3() .@)
Throu&h CC 4@,))) 7,))) 6,))) 3()
By 5ash C 6),))) C 67) 3) 6),(5)
Sur=lus
5arried
for8ard
C C 6,))) C C 6,)))
Pro'le3 #o $0
An assessee cleared !arious manufactured final roducts during January ()64. The duty
ayable for January ()64 on his final roducts was as follows C "asic C 's. (,)),))) +C and
/9+C C as alicable.
During the month, he recei!ed !arious inuts on which total duty aid by suliers of inuts
was as follows $
"asic duty C 's. ?),))),
+ducation Cess C 's. 6,))),
/9+C C 's. ?)).
44
+xcise duty aid on caital goods recei!ed during the month was as follows $
"asic duty C 's. 6(,))).
+ducation Cess C 's. (.).
/9+C C 's. 6().
/er!ice tax aid on inut ser!ices was as follows C /er!ice Tax C 's. 6),))). +ducation cess C
's. ()) /A9 +ducation Cess C 's. 6)).
9ow much duty the assessee will be re2uired to ay by +AR"C challan for the month of
January ()64, if assessee had no oening balance in his &0A account( 1hat is last date for
aymentS
Ans8er
C+,-AT credit a!ailable for January ()64
+xcise Duty>/T +C /9+C Total
Inuts ?),))) 6,))) ?)) ?6,?))
Caital :oods @,))) 6() @) @,67)
Inut /er!ice 6),))) ()) 6)) 6),4))
Total @@,))) 6,4() @@) @5,37)
&ayment of duty through CC and through :A' 5
Duty Amount &ayment through CC &ayment through :A' 5
+xcise (,)),))) @@,))) 6,4.,)))
+C .,))) 6,4() (,@7)
/9+C (,))) @@) 6,4.)
According to 'ule 7 of C+', the duty shall be aid within ? days after the end of the month
but where eCayment is made, instead of ? days, @ days are allowed. It is also to be noted
that eCayment is comulsory for the assessee who has aid duty of 's. 6).)) lacs or more
during the receding financial year.
45
Pro'le3 #o. $C
An assessee urchased !arious inuts and credit of duty on inuts was taken u instantly.
0ater on, some inuts were ilfered from the store room of the assessee. The roer officer
raised a demand under section 66A of the Central +xcise Act, 63.., and as er C+,-AT
Credit 'ules, ())., for reco!ery of C+,-AT credit wrongly taken on inuts lost from store
room. +xamine the case in the light of central excise ro!isions.
Ans8er
According to 'ule .<6= of CC', the assessee can a!ail CC on inuts as
soon as those are recei!ed.
'ule (<k= ro!ides that only those goods are the inuts which are used
in the factory.
:oods recei!ed in the factory are eligible for CC but if those goods are
not used then the CC already a!ailed shall be re!ersed.
In the gi!en case, if inuts are ilfered before use, then CC credit
a!ailed on the inuts ilfered shall be re!ersed by the assessee.
Therefore, the action taken by the Central +xcise Gfficer is justified.
46
Case 7a8s
'ecommended by ICAI
for

May and #o(. 20$3 -9a3s

47
Co33issioner 6s. SAI7 ,20$2. SC
Fa5ts " /AI0 mines ores from the mine.
The ore was crushed, grinded, washed and concentrated with the object of remo!ing foreign
articles.
The Deartment contended that the rocess carried out amounts to manufacture.
!e5ision < /ince no new articles comes into rocess by the acti!ity carried out, there is no
manufacture.
CC- 6s. )snar Che3i5als P(t. 7td. ,20$2. SC
Fa5ts $ Gsnar sulies bitumen at the customers# site. At the site, bitumen is heated and
some olymer is added for imro!ing the utility of bitumen.
!is=ute < The Deartment contents that the rocess of heating and adding olymers with
bitumen for imro!ing the utility amounts to manufacture.
!e5ision < The rocess carried out by the assessee does not result into new articles.
Further, the rocess carried out by the Assessee is also not secified under schedule to the
C+TA. Therefore, the rocess does not amount to manufacture.
+rasi3 Industries 7td. /)I ,20$$. SC
Fa5ts < Assessee remo!ed worn out arts of the machine relaced during reairs without
aying duty.
!is=ute " The Deartment contents that the worn out arts relaced during reairs also
attract duty and the goods should ha!e been remo!ed after aying duty.
!e5ision < &rocess of reairs does not amount to manufacture. Therefore, worn out arts
relaced during reairs cannot be said to ha!e been manufactured. Therefore, demand of
duty is not justified.
48
Medley Phar3a5euti5als 7td. 6s. CC-MC ,20$$. SC
Fa5ts < &harmaceutical samles remo!ed without ayment of duty.
!is=ute < /amles also attract dutyS
!e5ision < /amles gi!en to doctors are not allowed to be sold by law but it does not mean
those samles are not marketable. /ince samles gi!en to doctors satisfy all the
re2uirements of Dutiability, duty is ayable on samles also e!en though those are not
allowed to be sold.
/sha Re5tifier Cor=n. ,I. 7td. 6s. CC- ,20$$. SC
Fa5t" The assessee assembled some testing instrument within the factory for cati!e use
but did not ay duty.
!is=ute < Duty is ayable on goods assembled within the factory, e!en though not sold.
!e5ision < According to submission of the assessee, the testing instruments were
assembled so as to a!oid imort. This imlies that those instruments are marketable. Duty
becomes ayable e!en on e2uiments assembled within the factory for cati!e use.

CC- 6s. +TC Industries 7td. ,20$$.,Mu3'ai.
Fa5ts < Assessee embossed the word H&Q00I on the aluminum foil for its being used in the
acking of cigarettes.
!is=ute < The Deartment contends that the rocess of embossing aluminum foil amounts
to manufacture and attracts duty.
!e5ision < The court oined that the rocess of embossing word H&Q00I on the aluminum
foil does not result into a new article. Therefore, the rocess does not amount to
manufacture and, thus, duty is not attracted.
#ote" This case has become redundant. &lease ignore.
49
#i5holas Pira3al India 7td. 6s. CC-9 ,20$0. SC
Fa5ts < Certain goods manufactured by the assessee are ha!ing shelf life of (C4 days.
!is=ute < The assessee claims that due to short shelf life goods are not marketable and,
thus, do not attract duty.
!e5ision < /hort shelf life means the goods are not caable of being brought to the market
and sold. :oods ha!ing shelf life of (C4 days are ha!ing sufficient life for being brought to
the market and sold. :oods being marketable, subject to other re2uirements of dutiability,
are liable to duty.

Bata India 7td. 6s. CC-9. ,20$0. SC
Fa5ts < Certain goods manufactured by the assessee are not sold or marketable generally.
!is=ute < The 'e!enue contents that the goods generally not marketable but caable of
being sold e!en in hyothetical conditions are also said to be marketable and, thus, liable to
duty.
!e5ision < The Aex Court oined that hyothetical ossibility of goods being marketable is
not sufficient. The goods should be marketable in the ordinary course of business.
9yothetical ossibility of goods being sold does not make goods marketable in the real
sense. Therefore, duty cannot be le!ied on such goods.
CC- 6s. Solid and Corre5t -n&ineerin& ;or*s ,20$0. SC
Fa5ts < The assessee assembled ashalt batch mixing lant and installed that on a solid
base with nuts and bolts so as to make it immo!able.
!is=ute < The 'e!enue contents that the Ashalt batch mixing lant assembled by assessee
is mo!able and, thus, liable to duty.
50
!e5ision < The assessee had acceted that the urose of fixing the lant on solid base
with nuts and bolts was just to make it wobble free. There is no intention to make it
immo!able. The court oined that rimarily, the lant is mo!able and liable to duty.

CC- 6s. Sony Musi5 -ntertain3ent ,I. P(t. 7td. ,20$0.SC
Fa5ts < Assessee imorted &'+C'+CG'D+D CDs. Those CDs were acked in jewel box and
an inlay card was also inserted.
!is=ute < CDs are co!ered under schedule III of the Central +xcise Act. In relation to all
such goods acking amount to manufacture. Therefore, this acti!ity attracts excise duty.
!e5ision < In relation to goods co!ered under /chedule III of the Central +xcise Act,
acking becomes manufacture only if because of such acti!ity goods become marketable to
the ultimate consumer directly.
In the gi!en case the assessee has imorted reCrecorded CDs. Those are e2ually marketable
to the ultimate consumer before as well as after acking. ,o more marketability has been
created. Therefore, in this case, acking of reCrecorded CDs does not amount to
manufacture.
C.C-9. Mu3'ai 6s. Fiat India P(t. 7td. ,SC.
Fa5ts < The assessee sold the cars below the cost of roduction to make entry in the
market.
!is=ute < 1here the assessee is selling the cars below the cost of roduction, can
transaction !alue be regarded as correct !alue for the urose of assessmentS
!e5ision < The court oined that where the rice is artificially deressed, the rice does
not reflect true commercial !alue of the goods. Therefore, transaction !alue cannot be
regarded as correct !alue for assessment.
51
Maruti SuLu*i India 7td. 6s. CC- ,Tri.
Fa5ts < The dealers were adding reCdeli!ery charges and afterCsale ser!ice charges in
addition to their own margin.
!is=ute " The deartment contended that reCdeli!ery insection charges as well as
afterCsale ser!ice charges should form art of the assessable !alue.
!e5ision < After this decision the C"+C has issued a circular ,o. 34@>(@>()6) stating that
reCdeli!ery insection charges and afterCsale ser!ice charges are includible in the
assessable !alue.
Fle9 -n&&. 7td. 6s. CC-9. ,SC. ,20$2.
Fa5ts < Assessee claimed credit for the material used during testing of machine
manufactured by it. %anufacture of machine is comlete only after testing.
!is=ute < Credit cannot be claimed for the material used during testing of machine because
it is used after manufacture.
!e5ision < As er submissions by the assessee the court acceted that the machine is
marketable only after it has been tested and made fit as er customer#s re2uirement. It
means manufacture is not comlete until testing. Therefore, material used during testing is
eligible for credit.
CC-9. 6s. Tata Ad(an5ed Material 7i3ited
Fa5ts" The assessee claimed C+,-AT credit on caital goods and later on those goods were
destroyed by fire. The assessee got insurance claim inclusi!e of duty.
!is=ute < The Deartment contended that since the assessee got insurance claim inclusi!e
of duty aid on caital goods, he should re!erse the C+,-AT credit a!ailed on those caital
goods.
!e5ision < There is no ro!ision under the C+,-AT Credit 'ules, ()). re2uiring re!ersal of
credit if assessee recei!ed insurance claim inclusi!e of duty.
52
CCus 6s. Pri3e Bealth Care Produ5ts
Fa5ts" The assessee is a manufacturer of tooth aste and rocures tooth brushes. Tooth
brushes are offered free with tooth aste.
!is=ute < 1hether assessee can a!ail C+,-AT credit on the tooth brushes.
!e5ision < As er the definition of the term EInut# all the goods remo!ed with finished and
!alue of which is included in the !alue of finished goods shall be treated as inut. Therefore,
in the gi!en case are the inuts and the assess is entitled to a!ail credit on inuts.
CC- 6s. Bhu8al*a Steel Industries 7td
Fa5ts < Ruantity as shown and in the in!oice and recorded in the assessee shows some
negligible difference.
!is=ute < 1hether assessee can a!ail credit for the 2uantity mentioned in the documents
or for the 2uantity actually recei!ed.
!e5ision < ,egligible difference in 2uantity may also be caused because of different
weighing machines. Therefore, credit shall be allowed for the 2uantity referred in the
documents on the basis on which credit is to be taken.
CC-9. 6s. Stel5o Stri=s 7i3ited
Fa5ts < The assessee a!ailed credit on the basis of ri!ate challans.
!is=ute < 1hether credit can be taken on the basis of ri!ate challans.
!e5ision < As long as document genuine and there is no doubt about the amount of duty
shown therein, the assessee may a!ail credit e!en on the basis of ri!ate challans.
53
Ra&hunath International 7i3ited 6s. /)I
Fa5ts < /C, issued by the Additional Director :eneral, Directorate :eneral of Central
+xcise Intelligence.
!is=ute < 1hether Additional Director :eneral, Directorate :eneral of Central +xcise
Intelligence is a cometent authority to issue the /C,.
!e5ision < As er section 6(+ of the C+A, e!ery officer is authorised to exercise the
owers of the officers subordinate to him. Further, !ide notification issued in ())6
authorises the Additional Director :eneral, Directorate :eneral of Central +xcise
Intelligence to exercise owers of the Commissioner. Therefore, /C, issued by him is !alid.
A3ide( A&ro Care P(t. 7td. 6s. /)I
Fa5ts" Assessee got the know that there is some duty liability only when reco!ery
roceedings started.
!is=ute < 1hether ser!ice of order on the assessee is re2uired to be done by registered
ost only.
!e5ision < The original order of duty liability of the assessee was, as er Deartment
submission, sent by seed ost. /eed ost is not a !alid mode of deli!ery of order.
Therefore, order is to be sent by registered ost only. The time for filing the aeal begins
only when order sent by registered ost is recei!ed by assessee.
CC-9. Mu3'ai III 6s. Tit*itar Industries
Fa5ts < The rocess carried out by the assessee was declared by the Commissioner
<Aeals= as not a %anufacture. The decision of the Commissioner <Aeals= was not
challenged by the Deartment but issued another /C, on the same issue.
!is=ute < 1here deartment has already acceted decision of the Commissioner <Aeals=,
can /C, be issued for another eriod on the same issue.
54
!e5ision < The /C oined that where the Deartment did not 2uestioned the correctness of
the order assed by the Commissioner <Aeals= then it cannot issue on the same ground for
another eriod.
Bans Rollin& Mills 6s. CC-9
!is=ute $ 1hether ro!isions of section 66A are alicable in case of comounded le!y.
!e5ision < The /C is of the oinion that the Comounded 0e!y scheme is a comrehensi!e
scheme ro!iding mechanism for assessment and le!y of duty. &ro!isions of section 66A are
not alicable where an assessee has oted to ay duty under comounded le!y scheme.
CC-9 M C 6s. A55ra=a5 India P(t. 7td.
Fa5ts < The assessee did not disclose, at the time of alying for registration that the
rocess carried out by him includes denaturisation of ethyl alchohol. This rocess is re2uired
by law.
!is=ute < 1hether nonCdisclosure of a rocess re2uired by law can be considered as
suression of facts by assessee.
!e5ision < /ince the rocess of denaturing is re2uired by law, the assessee is not re2uired
to make disclosure thereof. The officer should ha!e known the rocess. There is no nonC
disclosure on the art of assessee.
Hanya*a Par3esh8ari -n&&. 7td. 6s. CC-9MC
Ran'a9y 7a'oratories 7td. 6s. /)I
>uestion < In case of refund under section 66", when the eriod begins for which interest
is ayable by the Deartment.
Ans8er < &ro!isions of section 66"" are !ery clear. Interest is to be aid by the
deartment only where refund is not allowed within three months since submission of
55
alication, for the eriod exceeding three months. The eriod for interest is ayable does
not commence since duty is aid or since alication for refund is submitted.
CC-9. 6s. Te5hno Ru''er Industries P(t. 7td.
Fa5ts < The assessee claimed refund of duty on the basis of debit note issued by the
customer.
!is=ute < 1hether debit note issued by the customer is a sufficient e!idence to establish
that the burden of excess duty has been borne by the assessee and it has not been assed
on to the customer.
!e5ision " +xcess amount of duty is refundable. Debit note issued by the customer is
admissible as an e!idence of the fact that the burden of excess duty is borne by the
assessee and it has not been assed on to the customer.
CC- 6s. +e3 Pro=erties ,P. 7td.
Fa5ts < The assessee had, as shown in the certificate issued by the CA, included amount of
duty in the cost of roduction and he suffered loss during the financial year.
>uestion < Can assessee claim refund of duty only because he had suffered loss during the
financial year.
!e5ision < /ince the assessee had already assed on the burden of duty to the customer, he
cannot be allowed refund only because he had suffered loss during the financial year.
Raj Me5hani5al Co. P(t. 7td. 6s. CC-
Fa5ts < Assessee#s aeal rejected by the Tribunal because of being time barred. The
assessee filed an aeal before the 9igh Court against the rejection of aeal and he also
clubbed the order against which aeal was filed before the Tribunal in the aeal before
9igh Court.
56
!is=ute " 1hether doctrine of merger is alicable where aeal is dismissed not on
merits but because of limitation of time.
!e5ision < 1here aeal is dismissed because of limitation of time, doctrine of merger
does not aly.
CC- 6s. Rajendra #arayan
Fa5ts < ,otification number 6>()66 exemts goods manufactured at site for use in
construction from duty. The assessee manufactures concrete blocks at one site and those
are distributed to !arious sites of %etro railway throughout Delhi.
!is=ute < The concrete blocks reared at one site and distributed throughout Delhi cannot
be said to be ha!e been constructed at site.
!e5ision < /ince the %etro roject is all o!er Delhi, therefore, whole Delhi is to be
considered as site and the assessee is entitled for exemtion notification.
CC- 6s. R!C Con5rete India P(t. 7td.
Fa5ts < The Aellate Tribunal is emowered to rectify any error in its order within two
years from the date on which order is assed.
!is=ute < During the rocess of rectifying the error, the AT reheard the whole case,
including e!idences, again and arri!ed at a different decision. 1hether action taken by the
AT is !alid.
!e5ision" The ower of AT to rectify the error does not emower the AT to hear the
whole case again and to gi!e a new judgment. The scoe of rectification is limited to minor
error ro!ided the emhasis of decision remains same.
CC- 6s. +uj5he3 !istilleries
Fa5ts < The AT is emowered to allow the aellant to raise new grounds of aeal.
!is=ute < 1here aellant is allowed to raise new grounds of aeal, is it ossible to ignore
all re!ious roceedings and to gi!e a decision only on the basis of new grounds.
57
!e5ision < During the rocess of aeal, all re!ious roceedings cannot be ignored. In
other words, decision cannot be based on new ground of aeal only.
CC- 6s. -le9 Hnittin& Ma5hnery
Fa5ts < The assessee is manufacturing knitting machines under the brand name of +0+F.
The brand is said to be owned by the artnershi firm in which the assessee is also a
artner.
!is=ute < The Deartment contents that the brand being used by the assessee is the brand
of another manufacturer. Therefore, the assessee is not entitled to a!ail //I exemtion for
the goods manufactured under that brand.
!e5ision < The assessee is a artner in the firm which is said to be owner of the brand
+0+F. "eing the artner in the said firm, he becomes art owner of the said brand also.
Therefore, goods manufactured under the brand +0+F are being manufactured by the
assessee under his own brand. Thus, //I exemtion cannot be denied.
BonanLo -n&& and Che3i5als P(t. 7td. 6s. CC-
Fa5ts < "y mistake duty has been aid by the assessee on wholly exemted goods.
!is=ute " 1hether !alue of goods on which duty has been so aid is to be excluded for
comuting turno!er for the urose of //I exemtion.
!e5ision < If goods are wholly exemted, the amount aid by mistake does not become
amount of duty and the exemted goods do not become dutiable goods. Therefore, !alue of
exemted goods should be excluded while comuting the turno!er for the urose of //I
exemtion.
CC- 6s. !eora -n&& ;or*s
Fa5ts < :oods remo!ed under the in!oice of two searate firm, ha!ing common factory and
brand name etc.
!is=ute < For the urose of //I exemtion, whether goods remo!ed from the same
factory under the in!oice of two firms can be clubbed.
58
!e5ision < 1here goods are manufactured within the same factory under the same brand
name are remo!ed under in!oice of two firms, then !alue of all the goods remo!ed from the
factory shall be clubbed for determining eligibility to claim //I exemtion.
Maruti Ta9 Print and Pro5essors P(t. 7td. 6s. CC-
Fa5ts < The Assessee alied for settlement. The /ettlement commission confirmed the
demand and refused to grant immunity.
!is=ute < 1hether settlement commission can refuse to grant immunity after settlement.
!e5ision " The /ettlement commission confirmed demand without utting onus on the
deartment to ro!e allegation of illegal remo!al. 1here /ettlement commission confirms
the demand, immunity should ha!e been granted against rosecution and enalty.
I5on Industries 6s. /)I
Fa5ts < The aellant carried on rocess, which amount to manufacture, without
registration. ,o duty has e!er been aid by him. 9is remises was raided. After the raid, he
obtained registration, filed a consolidated return for the ast.
In resect of his duty liability he alied for settlement but the settlement commission
rejected his alication.
!is=ute < /ince the assessee had filed consolidated return and the demand of duty relates
to the eriod e!en rior to the registration, whether settlement commission is justified in
rejecting the alication.
!e5ision < Gne of the most essential re2uirements for submission of alication for
settlement is that the assessee should ha!e filed returns within the meaning of 'ule 6( of
the Central +xcise 'ules. The consolidated return filed by the assessee is not a return
within the meaning of 'ule 6( of the C+'. Therefore, the /ettlement Commission is justified
to ha!e rejected the alication.
Ash8ani To'a55o Co. P(t. 7td. 6s. /)I
>uestion < 1hether ower gi!en to Central +xcise Gfficers under section 66AC are
exercisable by the /ettlement Commission also.
59
Ans8er < The owers gi!en under section 66AC are exercisable by the Central +xcise
Gfficers only and not by the /ettlement commission.
C/ST)MS
Co33issioner of 5usto3s ,I3=orts. 6s. Hon*an Syntheti5 Fi'ers
Fa5ts < There was an exemtion notification for imort of some kind of machine. The
textile commissioner confirmed that the machine imorted by the imorter is certainly
co!ered under the exemtion notification.
!is=ute < The machine imorted by the imorted did not confirm to the exemtion
notification word by word. The Deartment denied the exemtion to the imorter.
/ince the textile commissioner confirmed that the imorted machinery is co!ered within the
scoe of exemtion notification, the imorter claimed that the imorter is entitled to a!ail
the exemtion.
>uestion < If statutory definition is not a!ailable, whether exerts# oinion can be
considered for determining any issueS
Ans8er1 The Aex court confirmed that where statutory definition is not a!ailable under
the Customs act or Central +xcise Act, the safest way to resol!e the issue is to adot the
oinion gi!en by the exerts who deal with the same kind of goods>issues.
Tiru=ati /dyo& 7i3ited 6s. /)I
>uestion1 1hether any duty is le!iable under the Customs Act or /+U Act on suly of
goods from DTA to /+U.
Ans8er1 /uly of goods from DTA to /+U is deemed exort for the urose of Central
+xcise as well as Customs Act and it is exemt from excise as well as custom duty.
There is no ro!ision for le!y of any duty under the /+U Act.
CC- 6s. !e5orati(e 7a3inates India P(t. 7td.
60
Fa5ts < Imorted wanted to transfer title of the warehoused goods in fa!our of the
Commissioner after the exiry of the eriod of warehousing.
>uestion < 1hether owner of the imorted goods can transfer the title of goods in fa!our
of commissioner e!en after exiry of the eriod of warehousing and claim remission of duty.
!e5ision < In accordance with the ro!isions of section (4 and @7 of the Customs Act, title
of the goods can be transferred in fa!our of the ro!ided any offence has not been
committed in relation to those goods under any of the law.
/ince goods ha!e not been remo!ed from the warehouse within the rescribed, an offence
has already been committed under section @6 read with section 5(. /uch goods cannot be
transferred in fa!our of the Commissioner. Therefore, remission of duty cannot be allowed.
Heihin Penalfa 7i3ited 6s. Co33issioner of Custo3s
Fa5ts " The disute relates to a eriod rior to 6
st
%arch ())( regarding classification of
Automatic +lectronic 'egulator. Gn 6
st
%arch ())(, a notification issued by the :o!ernment
classified Automatic +lectronic 'egulator under secific heading.
>uestion < 1hether classification gi!en by the go!ernment can be alied for the disute
relating a eriod rior to issue of notification.
Ans8er < Classification gi!en by the :o!ernment should be alied e!en in relation to the
disutes relating to eriod rior to issue of notification.
Atherton -n&& Co. P(t. 7td. 6s. /)I
Fa5ts < 1hether classification of the goods will change if characteristics of the goods
change after imortation but before being usedS
!e5ision < If roduct undergoes a change after imortation and before being actually used
and if the goods are used for the urose those are imorted, then any change after
imortation but before use becomes immaterial for the urose of classification.
CPS Te9tiles P(t. 7td. 6s. %oint Se5retary
61
There are many imortant issues in this case.
6. The classification as er the documents submitted along with the shiing bill is
accetable if there is no disute regarding on the basis of technical details.
(. 1here exorter has already classified goods and that has been acceted, the
exorter cannot disute classification
4. The exorter is liable to ay interest on refund of duty drawback allowed erroneously
under section 5?A, e!en if it is not mentioned in the notice or order.
Co33issioner of Custo3s 6s. A&&ar8al Industries 7i3ited
Fa5ts $ The imorter had some long term agreement with the sulier of goods for suly of
goods at a fixed rice e!en if the rice increases in the market.
!is=ute $ 1hether rice as er the agreement can be acceted for assessment when !alue
of similar goods has gone u.
!e5ision < /ince it cannot be ro!ed that there is any kind of under !aluation of goods due
to collusion between the sulier o!erseas and the imorter in India and the rice of the
goods imorted is as er the agreement, it should be acceted for assessment.
Paras Fa' International 6s. CC-
Fa5ts < The aellant is a 6))A +GQ. The goods imorted and remo!ed without ayment of
duty are ket in the storeroom within the 6))A +GQ. As and when re2uired, these goods are
released for being used in manufacture.
!is=ute < whether remo!al of such goods from storeroom for being used in manufacture
amounts to remo!al for home consumtionS
!e5ision < The unit, as a whole, is registered as 6))A +GQ and its store room only. As long
as goods are within the unit, those cannot be considered to ha!e been remo!ed for home
consumtion.
CCus 6s. Trilu9 -le5troni5s
62
In case of consent orders <generally assed in settlement= neither assessee not the
deartment can file aeal against such order.
CCus 6s. BP7 7i3ited
Fa5ts < The assessee made an alication for refund along with a certificate issued by the
chartered accountant in suort of the claim of the alicant. 'efund is refused.
!e5ision < The certificate issued by the Chartered Accountant is one of the e!idences for
claiming refund but it is not a conclusi!e e!idence for allowing refund.
A3an Medi5al Produ5ts 7i3ited 6s. C. Cus.
Fa5ts < Can refund alication under section (5 be made only if duty has been ursuant to
an assessment order.
!e5ision " /ection (5 authorises for refund not only a erson who has aid the duty but it
section also authorises a erson to aly for refund where a duty has been borne by a
erson. For claiming refund /ection (5 deals with all tyes of refund under section (5 it is
immaterial whether duty has been aid against the assessment order or not.
#arayan #a3'iar Meloths 6s. CCus.
>uestion1 1hether refund claim can be denied only on the basis of the fact that the
alicant has filed certified coy of the challan and not the challan in original.
Ans8er1 /ection (5 dealing with the refund alication does not re2uire filing of original
documents.
Clarification ,o. (5?>45>(KCCF.7A dated (
nd
January ())( clarifies that a simle letter
along with certified coy of T'@ is sufficient for claiming refund. Therefore refund claim
cannot rejected in the gi!en case.
;rin&ly India P(t 7td. 6s. CCus.
Fa5ts < The imorter declared !alue of the imorted goods much lower than the actual
!alue. The Deartment got the goods !alued by the local !aluer. That !aluation was acceted
by the imorter and duty was aid accordingly.
63
!is=ute < +!en after ayment of duty on the !alue determined by the local !aluer, whether
goods can be confiscated.
!e5ision < /ince the imorter made a misCdeclaration regarding the !alue, those goods are
liable to be confiscated under section 666 e!en after he has aid duty on the !alue
determined by the !aluer aointed by the Deartment.
In Re < Be3al H Shah
The alicant brought in !arious dutiable articles in his baggage and the !alue declared by
him was substantially low. Those goods were confiscated and enalty was imosed. The
alicant roosed to exort those goods.
>uestion < 1hether smuggled goods can be reCexorted without being released from
confiscation.
Ans8er < /ince goods ha!e been confiscated, those cannot be exorted unless those are
released from confiscation.
S % Fa'ri5s India P(t. 7td. 6s. /)I
1here goods are sei;ed under section 66) and a notice is not issued to the erson concerned
within @ month since goods are sei;ed then such goods shall be returned.
Manish 7alit Hu3ar Bha(ishi 6s. Addl !ire5tor +eneral " !RI
0anguage of section 66) clearly indicates that where any documents are si;ed from any
erson during any action taken by the officer, the erson from whom such documents are
sei;ed is ha!ing a ri&ht to claim coies of such documents. The officers cannot deny coy of
the documents to the erson concerned.
) T -nashu 6s. /)I
64
&ro!isions of section 66( become alicable only when there is intentional effort by any
erson to e!ade the duty. Therefore, unless it is established that the erson has, by
omission or commission, sought to e!ade duty, no enalty can be imosed under section 66(.
Te9o=last Industries 6s. Addl CCus.
/ection 6.) ro!ides that the term comany includes artnershi firm and the term director
includes artners of the firm.
In case of any ci!il as well as criminal rosecution, the comany as well as it directors are
liable to be rosecuted.
CCus. 6s. %aya Sin&h 6ijaya %ha(eri
Confiscated order cannot be cancelled only for want of e!idence from the foreign sulier.
CCus. 6s. M A3'alal M Co.
Imorted goods and smuggled goods ha!e been defined searately. Qnder any condition and
for any urose, imorted goods and smuggled goods cannot be treated e2ually under the
Custom Act.
San&ha(i Re5onditioners P(t. 7Td. 6s. /)I
In case of settlement order, the assessee does not ha!e otion to accet art of the order
and not to accet remaining art. </ettlement orders are binding=
/)I 6s. -ast and ;est Shi==in& Co.
For all the uroses, roceedings before the /ettlement Commission are judicial roceedings.
This is further suorted by section 6(5%.
/)I 6s. Cus and C- Settle3ent Co33ission
Duty drawback is a subject matter related to duty. Duty drawback is allowed as a matter of
incenti!e for romoting exort. 1here duty drawback has been allowed erroneously, it can
be reco!ered back by the Deartment under section 5?A. 'eco!ery of duty drawback allowed
65
erroneously is a subject matter related to duty. The /ettlement commission is authorised to
handle subject matters related to reco!ery of duty drawback.
Ser(i5e Ta9
Rashtriya Is=at #i&a3 7i3ited 6s. !e8an Chand Ra3 Sharan
Fa5ts < The aellant aointed the resondent as Clearing and forwarding contractor under
an agreement. Agreement between the arties ro!ided that the all the taxes shall be borne
by the contractor and all such taxes shall be deducted by the reciient of ser!ice i.e. 'I,0,
aid to the go!ernment and accordingly certificate will be issued to the contractor.
Due to amendment in statutory ro!isions, ser!ice tax liability was shifted to recei!er of
ser!ice.
The reciient of ser!ice continues to deduct amount of ser!ice tax from the contractor.
The resondent was not willing to accet liability of ser!ice tax when the recei!er of ser!ice
is liable to ay.
>uestion < 1hether liability to ay ser!ice tax can be shifted by an agreement.
!e5ision < "eing an indirect tax, the liability to ay ser!ice tax can be shifted under an
agreement.
CC-,A. 6s. H 6 R Constru5tions
Fa5ts < The assessee was ro!iding construction ser!ices. /er!ices ro!ided to charitable
institutions were exemt from ser!ice tax liability. 9owe!er, by mistake the assessee aid
ser!ice tax on such exemt ser!ices also.
The assessee alied for refund of such amount after exiry of the time limit secified
under section 66".
!is=ute < 1hether the time limit secified under section 66" of the Central +xcise Act is
alicable for refund of amount of ser!ice tax aid by mistake.
!e5ision < &ayment of ser!ice tax on exemt ser!ice does not make the ser!ice taxable.
/er!ice tax aid on exemt ser!ice cannot be considered as ser!ice tax but it is only excess
deosit.
66
Time limit secified under section 66" does not aly for the amount of excess deosit.
Co33issioner of Ser(i5e Ta9 6s. 7in5oln Belios ,I. 7td.
/er!ice tax and central excise duty are go!erned by different statutes. "oth are re2uired to
be aid searately. It is immaterial that both the taxes are ayable at the same rate and
both are ayable to central go!ernment.
Hishore H S 6s. 5herthala Muni5i=ality
Fa5ts < The aellant had hired certain immo!able roerty from the municiality under an
agreement. The agreement had no mention of ser!ice tax. 1hen the tenant was called uon
to ay ser!ice tax, he contended that it was the resonsibility of the municiality.
!is=ute < Can liability to ay ser!ice tax be shifted by an agreementS
/er!ice tax is a statutory liability. It exists e!en if not ro!ided in the agreement. "eing
indirect tax, the resonsibility to ay ser!ice tax can be
Tiru3ala Tiru=ati !e(sthana3 6s. Su=erintendent of Custo3 Central -95ise and
Ser(i5e Ta9
Fa5ts < 'esidential remises rented out to de!otees on temorary basis.
!is=ute < 1hether ser!ice tax alicable where residential remises is rented out on
temorary basis without any rofit moti!e.
!e5ision < For ser!ice tax liability, there is no difference of rofit moti!e or no rofit
moti!e. Therefore, etitioner is liable to ay ser!ice tax.
Infote5h Soft8are !ealers Asso5iation 6s. /nion of India
>uestion < 1hether software ro!ided on end user license basis amount to ser!iceS
!e5ision < 1hether software amount to goods or ser!ice or combination of both, deends
on case to case basis. 1here it in!ol!es modification, alteration, adatation etc, such
acti!ities amount to ser!ice and thus, liable to ser!ice tax.
CC- 6s. #ahar Industrial -nter=rises 7i3ited
67
>uestion " 1hether "uffer stock subsidy ro!ided by the go!ernment to sugar
manufacturers is chargeable to ser!ice taxS
!e5ision < The buffer stock subsidy is ro!ided by the go!ernment to the sugar
manufacturers for maintaining free stock of the sugar. Against this subsidy no ser!ice is
being ro!ided by the manufacturer to the go!ernment. Therefore, subsidy so ro!ided
cannot be treated as a consideration for ser!ice. ,ot being a ser!ice charge, subsidy is not
chargeable to ser!ice tax.
CC- M ST 6s. Ade55o Fle9ione ;or*for5e Solutions 7td.
>uestion < 1hether enalty is ayable e!en where the assessee has aid the ser!ice tax
along with interest e!en before issue of /how Cause ,oticeS
Ans8er < It is !ery clearly ro!ided that where the assessee has aid amount of ser!ice
tax along with interest e!en before issue of /C, and if it is not a case of fraud,
misreresentation, suression of facts, etc, then no enalty can be imosed.
CC-9. M ST 6s. 6ol(o India 7i3ited
>uestion < Can aeal be filed in the 9igh Court regarding taxability of ser!iceS
Ans8er < The 9igh Court does not ha!e jurisdiction to decide the 2uestion of taxability of
any ser!ice. +xclusi!e jurisdiction on this issue is !ested with the /ureme Court.
The -nd
68
The CENVAT Credit Rules, 2004
Rule 1. Short title, extent and commencement
Rule 2. Definitions
(a) ca!ital "oods
(b) #$stoms %ariff &ct
(c) 'xcise &ct
(d) exem!ted "oods
(e) (exem!ted ser)ice*
(f) 'xcise %ariff &ct
(g) +inance &ct
(h) final !rod$cts
(ij) first sta"e dealer
() (in!$t*
(l) (in!$t ser)ice*
(!) in!$t ser)ice distri,$tor
(") -o, .or/
("a) lar"e tax!a0er
("aa) (man$fact$rer* or (!rod$cer*,1
(#) notification
($) (o$t!$t ser)ice*
(%) !erson lia,le for !a0in" ser)ice tax
(r) !ro)ider of taxa,le ser)ice
(s) second sta"e dealer
Rule &. #'23&% credit
Rule 4. #onditions for allo.in" #'23&% credit
Rule '. 4ef$nd of #'23&% #redit
Rule 'A( 4ef$nd of #'23&% credit to $nits in s!ecified areas
Rule '). 4ef$nd of #'23&% credit to ser)ice !ro)iders !ro)idin" ser)ices taxed on re)erse char"e ,asis
Rule *. 5,li"ation of a man$fact$rer or !rod$cer of final !rod$cts and a !ro)ider of o$t!$t ser)ice
Rule +. 6anner of distri,$tion of credit ,0 in!$t ser)ice distri,$tor
Rule +A. Distri,$tion of credit on in!$ts ,0 the office or an0 other !remises of o$t!$t ser)ice !ro)ider
Rule ,. Stora"e of in!$t o$tside the factor0 of the man$fact$rer
Rule -. Doc$ments and acco$nts
Rule -A. ( 7nformation relatin" to !rinci!al in!$ts
Rule 10. %ransfer of #'23&% credit
Rule 10A. %ransfer of #'23&% credit of additional d$t0 le)ia,le $nder s$,1section (5) of section 3 of the #$stoms
%ariff &ct
Rule 11. %ransitional !ro)ision
Rule 12. S!ecial dis!ensation in res!ect of in!$ts man$fact$red in factories located in s!ecified areas of 2orth 'ast
re"ion, 8$tch district of 9$-arat, State of :amm$ and 8ashmir and State of Si//im
69
Rule 12A. ;roced$re and facilities for lar"e tax!a0er
Rule 12AAA. ;o.er to im!ose restrictions in certain t0!es of cases
Rule 1&. ;o.er of #entral 9o)ernment to notif0 "oods for deemed #'23&% credit
Rule 14. 4eco)er0 of #'23&% credit .ron"l0 ta/en or erroneo$sl0 ref$nded
Rule 1'. #onfiscation and !enalt0
Rule 1'A. 9eneral !enalt0
Rule 1*. S$!!lementar0 !ro)ision
70
The CENVAT Credit Rules, 2004
/.0.R. (E).( 7n exercise of the !o.ers conferred ,0 section 37 of the #entral 'xcise &ct, 1944 (1 of 1944) and
section 94 of the +inance &ct, 1994 (32 of 1994) and in s$!ersession of the #'23&% #redit 4$les, 2002 and the
Ser)ice %ax #redit 4$les, 2002, exce!t as res!ects thin"s done or omitted to ,e done ,efore s$ch s$!ersession, the
#entral 9o)ernment here,0 ma/es the follo.in" r$les, namel0<1
Rule 1. 0h#rt title, e1te"t a"d c#!!e"ce!e"t.(
(1) %hese r$les ma0 ,e called the #'23&% #redit 4$les, 2004=
(2) %he0 extend to the .hole of 7ndia<
;ro)ided that nothin" contained in these r$les relatin" to a)ailment and $tili>ation of credit of ser)ice tax shall a!!l0
to the State of :amm$ and 8ashmir=
(3) %he0 shall come into force from the date of their !$,lication in the 5fficial 9a>ette=
2. 2efi"iti#"s. ( 3" these rules, u"less the c#"te1t #ther4ise re%uires,(
(a)5ca$ital g##ds5 means<1
(&) the follo.in" "oods, namel0<1
(i) all "oods fallin" $nder #ha!ter 82, #ha!ter 84, #ha!ter 85, #ha!ter 90, headin" 6805, "rindin"
.heels and the li/e, and !arts thereof fallin" $nder headin" 6804 of the +irst Sched$le to the 'xcise
%ariff &ct?
(ii) !oll$tion control e@$i!ment?
(iii) com!onents, s!ares and accessories of the "oods s!ecified at (i) and (ii)?
(i)) mo$lds and dies, -i"s and fixt$res?
()) refractories and refractor0 materials?
()i) t$,es and !i!es and fittin"s thereof?

()ii) stora"e tan/ and
()iii) motor )ehicles other than those fallin" $nder tariff headin"s 8702, 8703, 8704, 8711 and their
chassis, ,$t incl$din" d$m!ers and ti!!ers
$sed1
(1) in the factor0 of the man$fact$rer of the final !rod$cts, ,$t does not incl$de an0 e@$i!ment or
a!!liance $sed in an office? or
(1&) o$tside the factor0 of the man$fact$rer of the final !rod$cts for "eneration of electricit0 for ca!ti)e
$se .ithin the factor0? or
(2) for !ro)idin" o$t!$t ser)ice?
(A) motor )ehicle desi"ned for trans!ortation of "oods incl$din" their chassis re"istered in the name of the ser)ice
!ro)ider, .hen $sed for1
(i) !ro)idin" an o$t!$t ser)ice of rentin" of s$ch motor )ehicle? or
(ii) trans!ortation of in!$ts and ca!ital "oods $sed for !ro)idin" an o$t!$t ser)ice? or
(iii) !ro)idin" an o$t!$t ser)ice of co$rier a"enc0
(#) motor )ehicle desi"ned to carr0 !assen"ers incl$din" their chassis, re"istered in the name of the !ro)ider of
ser)ice, .hen $sed for !ro)idin" o$t!$t ser)ice of1
(i) trans!ortation of !assen"ers? or
(ii) rentin" of s$ch motor )ehicle? or
(iii) im!artin" motor dri)in" s/ills
(D) com!onents, s!ares and accessories of motor )ehicles .hich are ca!ital "oods for the assessee,
71
(b) 5Cust#!s Tariff Act means the #$stoms %ariff &ct, 1975 (51 of 1975)?
(c) 5E1cise Act means the #entral 'xcise &ct, 1944 (1 of 1944)?
(d) 5e1e!$ted g##ds5 means excisa,le "oods .hich are exem!t from the .hole of the d$t0 of excise le)ia,le
thereon, and incl$des "oods .hich are char"ea,le to 2il rate of d$t0 "oods in res!ect of .hich the ,enefit of an
exem!tion $nder 2otification 2o= 1B20111#', dated the 1st 6arch, 2011 or $nder entries at serial n$m,ers 67 and
128 of 2otification 2o= 12B20121#', dated the 17
th
6arch, 2012 is a)ailed
(e) 6e1e!$ted ser7ice8 means a1
(1) taxa,le ser)ice .hich is exem!t from the .hole of the ser)ice tax le)ia,le thereon? or
(2) ser)ice, on .hich no ser)ice tax is le)ia,le $nder section 66A of the +inance &ct? or
(3) taxa,le ser)ice .hose !art of )al$e is exem!ted on the condition that no credit of in!$ts and in!$t ser)ices,
$sed for !ro)idin" s$ch taxa,le ser)ice, shall ,e ta/en?
,$t shall not incl$de a ser)ice .hich is ex!orted in terms of r$le 6& of the Ser)ice %ax 4$les, 1994=
(f) 5E1cise Tariff Act5 means the #entral 'xcise %ariff &ct, 1985 (5 of 1986)?
(g) 59i"a"ce Act5 means the +inance &ct, 1994 (32 of 1994)?
(h) 5fi"al $r#ducts5 means excisa,le "oods man$fact$red or !rod$ced from in!$t, or $sin" in!$t ser)ice?
(ij) 5first stage dealer5 means a dealer, .ho !$rchases the "oods directl0 from,1
(i) the man$fact$rer $nder the co)er of an in)oice iss$ed in terms of the !ro)isions of #entral 'xcise 4$les,
2002 or from the de!ot of the said man$fact$rer, or from !remises of the consi"nment a"ent of the said
man$fact$rer or from an0 other !remises from .here the "oods are sold ,0 or on ,ehalf of the said man$fact$rer,
$nder co)er of an in)oice? or
(ii) an im!orter or from the de!ot of an im!orter or from the !remises of the consi"nment a"ent of the im!orter,
$nder co)er of an in)oice?
() 6i"$ut8 !ea"s:
(i) all "oods $sed in the factor0 ,0 the man$fact$rer of the final !rod$ct? or
(ii) an0 "oods incl$din" accessories, cleared alon" .ith the final !rod$ct, the )al$e of .hich is incl$ded in
the )al$e of the final !rod$ct and "oods $sed for !ro)idin" free .arrant0 for final !rod$cts? or
(iii) all "oods $sed for "eneration of electricit0 or steam for ca!ti)e $se? or
(i)) all "oods $sed for !ro)idin" an0 o$t!$t ser)ice? ,$t excl$des1
(&) li"ht diesel oil, hi"h s!eed diesel oil or motor s!irit, commonl0 /no.n as !etrol?
(A) an0 "oods $sed for 1
(a) constr$ction or exec$tion of .or/s contract of a ,$ildin" or a ci)il str$ct$re or a !art thereof? or
(,) la0in" of fo$ndation or ma/in" of str$ct$res for s$!!ort of ca!ital "oods,
exce!t for the !ro)ision of ser)ice !ortion in the exec$tion of a .or/s contract or constr$ction
ser)ice as listed $nder cla$se (,) of section 66' of the &ct?
(#) ca!ital "oods exce!t .hen $sed as !arts or com!onents in the man$fact$re of a final !rod$ct?
(D) motor )ehicles?
(') an0 "oods, s$ch as food items, "oods $sed in a "$estho$se, residential colon0, cl$, or a recreation
facilit0 and clinical esta,lishment, .hen s$ch "oods are $sed !rimaril0 for !ersonal $se or cons$m!tion
of an0 em!lo0ee? and
(+) an0 "oods .hich ha)e no relationshi! .hatsoe)er .ith the man$fact$re of a final !rod$ct=
Explanation. +or the !$r!ose of this cla$se, (free .arrant0* means a .arrant0 !ro)ided ,0 the
man$fact$rer, the )al$e of .hich is incl$ded in the !rice of the final !rod$ct and is not char"ed se!aratel0 from the
c$stomer?
(l) 6i"$ut ser7ice8 means an0 ser)ice, 1
(i) $sed ,0 a !ro)ider of o$t!$t ser)ice for !ro)idin" an o$t!$t ser)ice? or
72
(ii) $sed ,0 a man$fact$rer, .hether directl0 or indirectl0, in or in relation to the man$fact$re of final
!rod$cts and clearance of final !rod$cts $!to the !lace of remo)al,
and incl$des ser)ices $sed in relation to modernisation, reno)ation or re!airs of a factor0, !remises of !ro)ider of
o$t!$t ser)ice or an office relatin" to s$ch factor0 or !remises, ad)ertisement or sales !romotion, mar/et research,
stora"e $!to the !lace of remo)al, !roc$rement of in!$ts, acco$ntin", a$ditin", financin", recr$itment and @$alit0
control, coachin" and trainin", com!$ter net.or/in", credit ratin", share re"istr0, sec$rit0, ,$siness exhi,ition, le"al
ser)ices, in.ard trans!ortation of in!$ts or ca!ital "oods and o$t.ard trans!ortation $!to the !lace of remo)al? ,$t
excl$des,1
(&) ser)ice !ortion in the exec$tion of a .or/s contract and constr$ction ser)ices incl$din" ser)ice listed
$nder cla$se (,) of section 66' of the +inance &ct (hereinafter referred as s!ecified ser)ices) in so far as
the0 are $sed for 1
(a) constr$ction or exec$tion of .or/s contract of a ,$ildin" or a ci)il str$ct$re or a !art thereof?
or
(,) la0in" of fo$ndation or ma/in" of str$ct$res for s$!!ort of ca!ital "oods,
exce!t for the !ro)ision of one or more of the s!ecified ser)ices? or
(A) ser)ices !ro)ided ,0 .a0 of rentin" of a motor )ehicle, in so far as the0 relate to a motor )ehicle .hich is
not a ca!ital "oods? or
(A&) ser)ice of "eneral ins$rance ,$siness, ser)icin", re!air and maintenance , in so far as the0 relate to a motor
)ehicle .hich is not a ca!ital "oods, exce!t .hen $sed ,0 1
(a) a man$fact$rer of a motor )ehicle in res!ect of a motor )ehicle man$fact$red ,0 s$ch !erson ? or
(,) an ins$rance com!an0 in res!ect of a motor )ehicle ins$red or reins$red ,0 s$ch !erson? or
(#) s$ch as those !ro)ided in relation to o$tdoor caterin", ,ea$t0 treatment, health ser)ices, cosmetic and
!lastic s$r"er0, mem,ershi! of a cl$,, health and fitness centre, life ins$rance, health ins$rance and tra)el
,enefits extended to em!lo0ees on )acation s$ch as Cea)e or Dome %ra)el #oncession, .hen s$ch
ser)ices are $sed !rimaril0 for !ersonal $se or cons$m!tion of an0 em!lo0ee?*
(!) 5i"$ut ser7ice distribut#r5 means an office of the man$fact$rer or !rod$cer of final !rod$cts or !ro)ider of
o$t!$t ser)ice, .hich recei)es in)oices iss$ed $nder r$le 4& of the Ser)ice %ax 4$les, 1994 to.ards !$rchases of
in!$t ser)ices and iss$es in)oice, ,ill or, as the case ma0 ,e, challan for the !$r!oses of distri,$tin" the credit of
ser)ice tax !aid on the said ser)ices to s$ch man$fact$rer or !rod$cer or !ro)ider, as the case ma0 ,e?
(") 5j#b 4#r5 means !rocessin" or .or/in" $!on of ra. material or semi1finished "oods s$!!lied to the -o,
.or/er, so as to com!lete a !art or .hole of the !rocess res$ltin" in the man$fact$re or finishin" of an article or an0
o!eration .hich is essential for aforesaid !rocess and the Eex!ression -o, .or/er shall ,e constr$ed accordin"l0?
("a) 5large ta1$a;er5 shall ha)e the meanin" assi"ned to it in the #entral 'xcise 4$les, 2002
("aa) 6!a"ufacturer8 #r 6$r#ducer8,(
(i) in relation to articles of
1'
-e.eller0 or other articles of !recio$s metals fallin" $nder headin" 7113 or
7114 as the case ma0 ,e of the +irst Sched$le to the 'xcise %ariff &ct, incl$des a !erson .ho is lia,le to !a0 d$t0 of
excise le)ia,le on s$ch "oods $nder s$,r$le (1) of r$le 12&& of the #entral 'xcise 4$les, 2002?
(ii) in relation to "oods fallin" $nder #ha!ters 61, 62 or 63 of the +irst Sched$le to the 'xcise %ariff &ct,
incl$des a !erson .ho is lia,le to !a0 d$t0 of excise le)ia,le on s$ch "oods $nders$,1r$le (1&) of r$le 4 of
the #entral 'xcise 4$les, 2002??
(#) 5"#tificati#"5 means the notification !$,lished in the 5fficial 9a>ette?
($) 6#ut$ut ser7ice8 means an0 ser)ice !ro)ided ,0 a !ro)ider of ser)ice located in the taxa,le territor0 ,$t shall
not incl$de a ser)ice,1
(1) s!ecified in section 66D of the +inance &ct? or
(2) .here the .hole of ser)ice tax is lia,le to ,e !aid ,0 the reci!ient of ser)ice=
(%) 5$ers#" liable f#r $a;i"g ser7ice ta15 has the meanin" as assi"ned to it in cla$se (d) of s$,1r$le (1) of r$le 2
of the Ser)ice %ax 4$les, 1994?
(r) 5$r#7ider #f ta1able ser7ice incl$de a !erson lia,le for !a0in" ser)ice tax?
(s) 5sec#"d stage dealer5 means a dealer .ho !$rchases the "oods from a first sta"e dealer?
73
(t) 4#rds a"d e1$ressi#"s used in these r$les and not defined ,$t defined in the 'xcise &ct or the +inance &ct shall
ha)e the meanin"s res!ecti)el0 assi"ned to them in those &cts=
Rule &. CENVAT credit.(
(1) & man$fact$rer or !rod$cer of final !rod$cts or a !ro)ider of o$t!$t ser)ice shall ,e allo.ed to ta/e credit
(hereinafter referred to as the #'23&% credit) of 1
(i) the d$t0 of excise s!ecified in the +irst Sched$le to the 'xcise %ariff &ct, le)ia,le $nder the 'xcise
&ct?
<r#7ided that #'23&% credit of s$ch d$t0 of excise shall not ,e allo.ed to ,e ta/en .hen !aid on an0
"oods F
(a) in res!ect of .hich the ,enefit of an exem!tion $nder notification 2o=1B20111#', dated the
1
st
6arch, 2011 is a)ailed? or
(,) s!ecified in serial n$m,ers 67 and 128 in res!ect of .hich the ,enefit of an exem!tion
$nder 2otification 2o= 12B20121#',dated the 17
th
6arch, 2012 is a)ailed?
(ii) the d$t0 of excise s!ecified in the Second Sched$le to the 'xcise %ariff &ct, le)ia,le $nder the 'xcise
&ct?
(iii) the additional d$t0 of excise le)ia,le $nder section 3 of the &dditional D$ties of 'xcise (%extile and
%extile &rticles) &ct,1978 ( 40 of 1978)?
(i)) the additional d$t0 of excise le)ia,le $nder section 3 of the &dditional D$ties of 'xcise (9oods of
S!ecial 7m!ortance) &ct, 1957 ( 58 of 1957)
()) the 2ational #alamit0 #ontin"ent d$t0 le)ia,le $nder section 136 of the +inance &ct, 2001 (14 of
2001)?
()i) the 'd$cation #ess on excisa,le "oods le)ia,le $nder section 91 read .ith section 93 of the +inance
(2o=2) &ct, 2004 (23 of 2004)?
()ia) the Secondar0 and Di"her 'd$cation #ess on excisa,le "oods le)ia,le $nder section 136 read .ith
section 138 of the +inance &ct, 2007 (22 of 2007)?
()ii) the additional d$t0 le)ia,le $nder section 3 of the #$stoms %ariff &ct, e@$i)alent to the d$t0 of excise
s!ecified $nder cla$ses (i), (ii), (iii), (i)), ()) , ()i) and ()ia)?
<r#7ided that #'23&% credit shall not ,e allo.ed in excess of ei"ht01fi)e !er cent= of the
additional d$t0 of c$stoms !aid $nder s$,1section (1) of section 3 of the #$stoms %ariff &ct, on shi!s,
,oats and other floatin" str$ct$res for ,rea/in" $! fallin" $nder tariff item 8908 00 00 of the +irst
Sched$le to the #$stoms %ariff &ct?
()iia) the additional d$t0 le)ia,le $nder s$,1section (5) of section 3 of the #$stoms %ariff &ct=
()iii) the additional d$t0 of excise le)ia,le $nder section 157 of the +inance &ct, 2003 (32 of 2003)?
(ix) the ser)ice tax le)ia,le $nder section 66 of the +inance &ct? and
(ixa) the ser)ice tax le)ia,le $nder section 66&of the +inance &ct? and=
(ix,) the ser)ice tax le)ia,le $nder section 66A of the +inance &ct?
(x) the 'd$cation #ess on taxa,le ser)ices le)ia,le $nder section 91 read .ith section 95 of the +inance
(2o=2) &ct, 2004 (23 of 2004),
(xa) the Secondar0 and Di"her 'd$cation #ess on taxa,le ser)ices le)ia,le $nder section 136 read .ith
section 140 of the +inance &ct, 2007 (22 of 2007)? and?
(xi) the additional d$t0 of excise le)ia,le $nder section 85 of +inance &ct, 2005 (18 of 2005)
!aid on1
(i) an0 in!$t or ca!ital "oods recei)ed in the factor0 of man$fact$re of final !rod$ct or ,0 the !ro)ider of
o$t!$t ser)ice on or after the 10th da0 of Se!tem,er, 2004? and
(ii) an0 in!$t ser)ice recei)ed ,0 the man$fact$rer of final !rod$ct or ,0 the !ro)ider of o$t!$t ser)ices on or
after the 10th da0 of Se!tem,er, 2004,
74
incl$din" the said d$ties, or tax, or cess !aid on an0 in!$t or in!$t ser)ice, as the case ma0 ,e, $sed in the
man$fact$re of intermediate !rod$cts, ,0 a -o,1.or/er a)ailin" the ,enefit of exem!tion s!ecified in the notification
of the 9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of 4e)en$e), 2o= 214B861 #entral 'xcise, dated
the 25th 6arch, 1986, !$,lished in the 9a>ette of 7ndia )ide n$m,er 9=S=4= 547 ('), dated the 25th 6arch, 1986,
and recei)ed ,0 the man$fact$rer for $se in, or in relation to, the man$fact$re of final !rod$ct, on or after the 10th
da0 of Se!tem,er, 2004=
<r#7ided that the #'23&% credit shall ,e allo.ed to ,e ta/en of the amo$nt e@$al to central excise d$t0 !aid
on the ca!ital "oods at the time of de,ondin" of the $nit in terms of the !ara 8 of notification 2o= 22B20031#entral
'xcise, !$,lished in the 9a>ette of 7ndia, !art 77, Section 3,s$,1section(i),)ide n$m,er 9=S=4= 265('), dated, the
31st 6arch,2003=
Explanation.( +or the remo)al of do$,ts it is clarified that the man$fact$rer of the final !rod$cts and the
!ro)ider of o$t!$t ser)ice shall ,e allo.ed #'23&% credit of additional d$t0 le)ia,le $nder section 3 of the
#$stoms %ariff &ct on "oods fallin" $nder headin" 9801 of the +irst Sched$le to the #$stoms %ariff &ct=
(2) 2ot.ithstandin" an0thin" contained in s$,1r$le (1), the man$fact$rer or !rod$cer of final !rod$cts shall ,e
allo.ed to ta/e #'23&% credit of the d$t0 !aid on in!$ts l0in" in stoc/ or in !rocess or in!$ts contained in the
final !rod$cts l0in" in stoc/ on the date on .hich an0 "oods man$fact$red ,0 the said man$fact$rer or !rod$cer
cease to ,e exem!ted "oods or an0 "oods ,ecome excisa,le=
(&) 2ot.ithstandin" an0thin" contained in s$,1r$le (1), in relation to a ser)ice .hich ceases to ,e an exem!ted
ser)ice, the !ro)ider of the o$t!$t ser)ice shall ,e allo.ed to ta/e #'23&% credit of the d$t0 !aid on the in!$ts
recei)ed on and after the 10th da0 of Se!tem,er, 2004 and l0in" in stoc/ on the date on .hich an0 ser)ice ceases to
,e an exem!ted ser)ice and $sed for !ro)idin" s$ch ser)ice=
(4) %he #'23&% credit ma0 ,e $tili>ed for !a0ment of 1
(a) an0 d$t0 of excise on an0 final !rod$ct? or
(,) an amo$nt e@$al to #'23&% credit ta/en on in!$ts if s$ch in!$ts are remo)ed as s$ch or after ,ein"
!artiall0 !rocessed? or
(c) an amo$nt e@$al to the #'23&% credit ta/en on ca!ital "oods if s$ch ca!ital "oods are remo)ed as
s$ch? or
(d) an amo$nt $nder s$, r$le (2) of r$le 16 of #entral 'xcise 4$les, 2002? or
(e) ser)ice tax on an0 o$t!$t ser)ice<
<r#7ided that .hile !a0in" d$t0 of excise or ser)ice tax, as the case ma0 ,e, the #'23&% credit shall ,e
$tili>ed onl0 to the extent s$ch credit is a)aila,le on the last da0 of the month or @$arter, as the case ma0 ,e, for
!a0ment of d$t0 or tax relatin" to that month or the @$arter, as the case ma0 ,e<
<r#7ided further that #'23&% credit shall not ,e $tilised for !a0ment of an0 d$t0 of excise on "oods in
res!ect of .hich the ,enefit of an exem!tion $nder notification 2o= 1B20111#', dated the 1st 6arch, 2011 is
a)ailed<
<r#7ided als# that the #'23&% credit of the d$t0, or ser)ice tax, !aid on the in!$ts, or in!$t ser)ices, $sed in
the man$fact$re of final !rod$cts cleared after a)ailin" of the exem!tion $nder the follo.in" notifications of
9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of 4e)en$e),1
(i) 2o= 32B991#entral 'xcise, dated the 8th :$l0, 1999 9=S=4= 508('), dated 8th :$l0, 1999?
(ii) 2o= 33B991#entral 'xcise, dated the 8th :$l0, 1999 9=S=4= 509('), dated 8th :$l0, 1999?
(iii) 2o= 39B20011#entral 'xcise, dated the 31st :$l0, 2001 9=S=4= 565 ('), dated the 31st :$l0, 2001?
(i)) 2o= 56B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9=S=4= 764('), dated the 14th 2o)em,er
2002?
()) 2o= 57B20021#entral 'xcise, dated 14th 2o)em,er, 2002 9=S=4== 765('), dated the 14th 2o)em,er,
2002?
()i) 2o= 56B20031#entral 'xcise, dated the 25th :$ne, 2003 9=S=4= 513 ('), dated the 25th :$ne, 2003? and
()ii) 2o= 71B20031#entral 'xcise, dated the 9th Se!tem,er, 2003 9=S=4= 717 ('), dated the 9th Se!tem,er,
2003,
shall, res!ecti)el0, ,e $tili>ed onl0 for !a0ment of d$t0 on final !rod$cts, in res!ect of .hich exem!tion
$nder the said res!ecti)e notifications is a)ailed of=
75
<r#7ided als# that no credit of the additional d$t0 le)ia,le $nder s$,1section (5) of section 3 of the #$stoms
%ariff &ct, shall ,e $tilised for !a0ment of ser)ice tax on an0 o$t!$t ser)ice<
<r#7ided als# that the #'23&% credit of an0 d$t0 mentioned in s$,1r$le (1), other than credit of additional
d$t0 of excise le)ia,le $nder section 85 of +inance &ct, 2005 (18 of 2005 ) shall not ,e $tilised for !a0ment of said
additional d$t0 of excise on final !rod$cts
<r#7ided als# that the #'23&% credit of an0 d$t0 s!ecified in s$,1r$le (1), exce!t the 2ational #alamit0
#ontin"ent d$t0 in item ()) thereof, shall not ,e $tili>ed for !a0ment of the said 2ational #alamit0 #ontin"ent d$t0
on "oods fallin" $nder tariff items 8517 12 10 and 8517 12 90 res!ecti)el0 of the +irst Sched$le of the #entral
'xcise %ariff=
<r#7ided als# that the #'23&% credit of an0 d$t0 s!ecified in s$,1r$le (1) shall not ,e $tili>ed for !a0ment
of the #lean 'ner"0 #ess le)ia,le $nder section 83 of the +inance &ct, 2010 (14 of 2010)
Explanation= 1 #'23&% credit cannot ,e $sed for !a0ment of ser)ice tax in res!ect of ser)ices .here the !erson
lia,le to !a0 tax is the ser)ice reci!ient=
(') Ghen in!$ts or ca!ital "oods, on .hich #'23&% credit has ,een ta/en, are remo)ed as s$ch from the factor0,
or !remises of the !ro)ider of o$t!$t ser)ice, the man$fact$rer of the final !rod$cts or !ro)ider of o$t!$t ser)ice, as
the case ma0 ,e, shall !a0 an amo$nt e@$al to the credit a)ailed in res!ect of s$ch in!$ts or ca!ital "oods and s$ch
remo)al shall ,e made $nder the co)er of an in)oice referred to in r$le 9<
<r#7ided that s$ch !a0ment shall not ,e re@$ired to ,e made .here an0 in!$ts or ca!ital "oods are remo)ed
o$tside the !remises of the !ro)ider of o$t!$t ser)ice for !ro)idin" the o$t!$t ser)ice<
<r#7ided further that s$ch !a0ment shall not ,e re@$ired to ,e made .here an0 in!$ts are remo)ed o$tside
the factor0 for !ro)idin" free .arrant0 for final !rod$cts<
(5&) 7f the ca!ital "oods, on .hich #'23&% credit has ,een ta/en, are remo)ed after ,ein" $sed, .hether as
ca!ital "oods or as scra! or .aste, the man$fact$rer or !ro)ider of o$t!$t ser)ices shall !a0 an amo$nt e@$al to the
#'23&% #redit ta/en on the said ca!ital "oods red$ced ,0 the !ercenta"e !oints calc$lated ,0 strai"ht line method
as s!ecified ,elo. for each @$arter of a 0ear or !art thereof from the date of ta/in" the #'3&% #redit, namel0<1
(a) for com!$ters and com!$ter !eri!herals <
for each @$arter in the first 0ear H 10I
for each @$arter in the second 0ear H 8I
for each @$arter in the third 0ear H 5I
for each @$arter in the fo$rth and fifth 0ear H 1I
(,) for ca!ital "oods, other than com!$ters and com!$ter !eri!herals H 2=5I for each @$arter<
;ro)ided that if the amo$nt so calc$lated is less than the amo$nt e@$al to the d$t0 le)ia,le on transaction )al$e,
the amo$nt to ,e !aid shall ,e e@$al to the d$t0 le)ia,le on transaction )al$e=
(5A) 7f the )al$e of an0,
(i) in!$t, or
(ii) ca!ital "oods ,efore ,ein" !$t to $se, on .hich #'23&% credit has ,een ta/en is .ritten off f$ll0 or
!artiall0 or .here an0 !ro)ision to .rite off f$ll0 or !artiall0 has ,een made in the ,oo/s of acco$nt then the
man$fact$rer or ser)ice !ro)ider, as the case ma0 ,e, shall !a0 an amo$nt e@$i)alent to the #'23&% credit ta/en
in res!ect of the said in!$t or ca!ital "oods<
<r#7ided that if the said in!$t or ca!ital "oods is s$,se@$entl0 $sed in the man$fact$re of final !rod$cts or the
!ro)ision of o$t!$t ser)ices, the man$fact$rer or o$t!$t ser)ice !ro)ider, as the case ma0 ,e, shall ,e entitled to
ta/e the credit of the amo$nt e@$i)alent to the #'23&% credit !aid earlier s$,-ect to the other !ro)isions of these
r$les=
'x!lanation= F 7f the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice fails to !a0 the amo$nt !a0a,le $nder
s$,1r$les (5), (5&), and (5A), it shall ,e reco)ered, in the manner as !ro)ided in r$le 14, for reco)er0 of #'23&%
credit .ron"l0 ta/en=
76
(5#)=1 Ghere on an0 "oods man$fact$red or !rod$ced ,0 an assessee, the !a0ment of d$t0 is ordered to ,e remitted
$nder r$le 21 of the #entral 'xcise 4$les, 2002, the #'23&% credit ta/en on the in!$ts $sed in the man$fact$re or
!rod$ction of said "oods shall ,e re)ersed=
(6) %he amo$nt !aid $nder s$,1r$le (5) and s$,1r$le (5&) shall ,e eli"i,le as #'23&% credit as if it .as a d$t0
!aid ,0 the !erson .ho remo)ed s$ch "oods $nder s$,1r$le (5) and s$,1r$le (5&)=
(7) 2ot.ithstandin" an0thin" contained in s$,1r$le (1) and s$,1r$le (4),1
(a) #'23&% credit in res!ect of in!$ts or ca!ital "oods !rod$ced or man$fact$red, ,0 a h$ndred !er cent=
ex!ort1oriented $nderta/in" or ,0 a $nit in an 'lectronic Dard.are %echnolo"0 ;ar/ or in a Soft.are %echnolo"0
;ar/ other than a $nit .hich !a0s excise d$t0 le)ied $nder section 3 of the 'xcise &ct read .ith serial n$m,ers 3,5,
6 and 7 of notification 2o= 23B20031#entral 'xcise, dated the 31st 6arch, 2003, 9=S=4= 266('), dated the 31st
6arch, 2003 and $sed in the man$fact$re of the final !rod$cts or in !ro)idin" an o$t!$t ser)ice, in an0 other !lace
in 7ndia, in case the $nit !a0s excise d$t0 $nder section 3 of the 'xcise &ct read .ith serial n$m,er 2 of the
notification 2o= 23B20031#entral 'xcise, dated the 31st 6arch, 2003, 9=S=4= 266('), dated the 31st 6arch, 2003,
shall ,e admissi,le e@$i)alent to the amo$nt calc$lated in the follo.in" manner, namel0<1
+ift0 !er cent= of J m$lti!lied ,0 K(1LA#DB100) m$lti!lied ,0 (#3DB100)M, .here A#D and #3D denote ad
)alorem rates, in !er cent=, of ,asic c$stoms d$t0 and additional d$t0 of c$stoms le)ia,le on the in!$ts or the ca!ital
"oods res!ecti)el0 and J denotes the assessa,le )al$e=
<r#7ided that the #'23&% credit in res!ect of in!$ts and ca!ital "oods cleared on or after 1st 6arch, 2006
from an ex!ort oriented $nderta/in" or ,0 a $nit in 'lectronic Dard.are %echnolo"0 ;ar/ or in a Soft.are
%echnolo"0 ;ar/, as the case ma0 ,e, on .hich s$ch $nit !a0s excise d$t0 $nder section 3 of the 'xcise &ct read
.ith serial n$m,er 2 of the notification no= 23B20031#entral 'xcise dated 31st 6arch, 2003 9=S=4= 266('), dated the
31st 6arch, 2003 shall ,e e@$al to KJ m$lti!lied ,0 (1LA#DB200) m$lti!lied ,0 (#3DB100)=M
<r#7ided further that the #'23&% credit in res!ect of in!$ts and ca!ital "oods cleared on or after the 7 th
Se!tem,er, 2009 from an ex!ort1oriented $nderta/in" or ,0 a $nit in 'lectronic Dard.are %echnolo"0 ;ar/ or in a
Soft.are %echnolo"0 ;ar/, as the case ma0 ,e, on .hich s$ch $nderta/in" or $nit has !aid 1
(&) excise d$t0 le)ia,le $nder section 3 of the 'xcise &ct read .ith serial n$m,er 2 of the notification no=
23B20031#entral 'xcise, dated 31st 6arch, 2003 9=S=4= 266('), dated the 31st 6arch, 2003? and
(A) the 'd$cation #ess le)ia,le $nder section 91 read .ith section 93 of the +inance (2o= 2) &ct, 2004 and
the Secondar0 and Di"her 'd$cation #ess le)ia,le $nder section 136 read .ith section 138 of the +inance &ct,
2007, on the excise d$t0 referred to in (&), shall ,e the a""re"ate of 1
(7) that !ortion of excise d$t0 referred to in (&), as is e@$i)alent to 1
(i) the additional d$t0 le)ia,le $nder s$,1section (1) of section 3 of the #$stoms %ariff
&ct, .hich is e@$al to the d$t0 of excise $nder cla$se (a) of s$,1section (1) of section
3 of the 'xcise &ct?
(ii) the additional d$t0 le)ia,le $nder s$,1section (5) of section 3 of the #$stoms %ariff
&ct? and
(77) the 'd$cation #ess and the Secondar0 and Di"her 'd$cation #ess referred to in (A)
(,) #'23&% credit in res!ect of 1
(i) the additional d$t0 of excise le)ia,le $nder section 3 of the &dditional D$ties of 'xcise (%extiles
and %extile &rticles) &ct, 1978 (40 of 1978)?
(ii) the 2ational #alamit0 #ontin"ent d$t0 le)ia,le $nder section 136 of the +inance &ct, 2001 (14 of
2001)?
(iii) the ed$cation cess on excisa,le "oods le)ia,le $nder section 91 read .ith section 93 of the
+inance (2o=2) &ct, 2004 (23 of 2004)?
(iiia) the Secondar0 and Di"her 'd$cation #ess on excisa,le "oods le)ia,le $nder section 136 read .ith
section 138 of the +inance &ct, 2007 (22 of 2007) ?
(i)) the additional d$t0 le)ia,le $nder section 3 of the #$stoms %ariff &ct, e@$i)alent to the d$t0 of
excise s!ecified $nder items (i), (ii) and (iii) a,o)e?
()) the additional d$t0 of excise le)ia,le $nder section 157 of the +inance &ct, 2003 (32 of 2003)?
()i) the ed$cation cess on taxa,le ser)ices le)ia,le $nder section 91 read .ith section 95 of the
+inance (2o=2) &ct, 2004 (23 of 2004)? and
77
()ia) the Secondar0 and Di"her 'd$cation #ess on taxa,le ser)ices le)ia,le $nder section 136 read .ith
section 140 of the +inance &ct, 2007 (22 of 2007)? and?
()ii) the additional d$t0 of excise le)ia,le $nder section 85 of +inance &ct, 2005 (18 of 2005 )
shall ,e $tilised to.ards !a0ment of d$t0 of excise or as the case ma0 ,e, of ser)ice tax le)ia,le $nder the said
&dditional D$ties of 'xcise (%extiles and %extile &rticles) &ct, 1978 or the 2ational #alamit0 #ontin"ent d$t0
le)ia,le $nder section 136 of the +inance &ct, 2001 (14 of 2001), or the ed$cation cess on excisa,le "oods le)ia,le
$nder section 91 read .ith section 93 of the said +inance (2o=2) &ct, 2004 (23 of 2004), or the Secondar0 and
Di"her 'd$cation #ess on excisa,le "oods le)ia,le $nder section 136 read .ith section 138 of the +inance &ct,
2007 (22 of 2007) or the additional d$t0 of excise le)ia,le $nder section 157 of the +inance &ct, 2003 (32 of 2003),
or the ed$cation cess on taxa,le ser)ices le)ia,le $nder section 91 read .ith section 95 of the said +inance (2o=2)
&ct, 2004 (23 of 2004), or the Secondar0 and Di"her 'd$cation #ess on taxa,le ser)ices le)ia,le $nder section 136
read .ith section 140 of the +inance &ct, 2007 (22 of 2007), or the additional d$t0 of excise le)ia,le $nder section
85 of the +inance &ct, 2005 (18 of 2005) res!ecti)el0, on an0 final !rod$cts man$fact$red ,0 the man$fact$rer or
for !a0ment of s$ch d$t0 on in!$ts themsel)es, if s$ch in!$ts are remo)ed as s$ch or after ,ein" !artiall0 !rocessed
or on an0 o$t!$t ser)ice?
<r#7ided that the credit of the ed$cation cess on excisa,le "oods and the ed$cation cess on taxa,le ser)ices
can ,e $tili>ed, either for !a0ment of the ed$cation cess on excisa,le "oods or for the !a0ment of the ed$cation cess
on taxa,le ser)ices<
<r#7ided further that the credit of the Secondar0 and Di"her 'd$cation #ess on excisa,le "oods and the
Secondar0 and Di"her 'd$cation #ess on taxa,le ser)ices can ,e $tili>ed, either for !a0ment of the Secondar0 and
Di"her 'd$cation #ess on excisa,le "oods or for the !a0ment of the Secondar0 and Di"her 'd$cation #ess on
taxa,le ser)ices=
E1$la"ati#".( +or the remo)al of do$,ts, it is here,0 declared that the credit of the additional d$t0 of excise
le)ia,le $nder section 3 of the &dditional D$ties of 'xcise (9oods of S!ecial 7m!ortance) &ct, 1957 (58 of 1957)
!aid on or after the 1st da0 of &!ril, 2000, ma0 ,e $tilised to.ards !a0ment of d$t0 of excise le)ia,le $nder the
+irst Sched$le or the Second Sched$le to the 'xcise %ariff &ct?
(c) the #'23&% credit, in res!ect of additional d$t0 le)ia,le $nder section 3 of the #$stoms %ariff &ct, !aid
on mar,le sla,s or tiles fallin" $nder tariff items 2515 12 20 and 2515 12 90 res!ecti)el0 of the +irst Sched$le to the
'xcise %ariff &ct shall ,e allo.ed to the extent of thirt0 r$!ees !er s@$are meter?
E1$la"ati#".( Ghere the !ro)isions of an0 other r$le or notification !ro)ide for "rant of .hole or !art
exem!tion on condition of non1a)aila,ilit0 of credit of d$t0 !aid on an0 in!$t or ca!ital "oods, or of ser)ice tax !aid
on in!$t ser)ice, the !ro)isions of s$ch other r$le or notification shall !re)ail o)er the !ro)isions of these r$les=
Rule 4. C#"diti#"s f#r all#4i"g CENVAT credit.(
(1) %he #'23&% credit in res!ect of in!$ts ma0 ,e ta/en immediatel0 on recei!t of the in!$ts in the factor0 of the
man$fact$rer or in the !remises of the !ro)ider of o$t!$t ser)ice<
<r#7ided that in res!ect of final !rod$cts, namel0, articles of -e.eller0 or other articles of !recio$s metals
fallin" $nder headin" 7113 or 7114as the case ma0 ,e of the +irst Sched$le to the 'xcise %ariff &ct, the #'23&%
credit of d$t0 !aid on in!$ts ma0 ,e ta/en immediatel0 on recei!t of s$ch in!$ts in the re"istered !remises of the
!erson .ho "et s$ch final !rod$cts man$fact$red on his ,ehalf, on -o, .or/ ,asis, s$,-ect to the condition that the
in!$ts are $sed in the man$fact$re of s$ch final !rod$ct ,0 the -o, .or/er=
<r#7ided further that the #'23&% credit in res!ect of in!$ts ma0 ,e ta/en ,0 the !ro)ider of o$t!$t ser)ice
.hen the in!$ts are deli)ered to s$ch !ro)ider, s$,-ect to maintenance of doc$mentar0 e)idence of deli)er0 and
location of the in!$ts=
(2) (a) %he #'23&% credit in res!ect of ca!ital "oods recei)ed in a factor0 or in the !remises of the !ro)ider of
o$t!$t ser)ice
4
or o$tside the factor0 of the man$fact$rer of the final !rod$cts for "eneration of electricit0 for
ca!ti)e $se .ithin the factor0 at an0 !oint of time in a "i)en financial 0ear shall ,e ta/en onl0 for an amo$nt not
exceedin" fift0 !er cent= of the d$t0 !aid on s$ch ca!ital "oods in the same financial 0ear<
<r#7ided that the #'23&% credit in res!ect of ca!ital "oods shall ,e allo.ed for the .hole amo$nt of the d$t0
!aid on s$ch ca!ital "oods in the same financial 0ear if s$ch ca!ital "oods are cleared as s$ch in the same financial
0ear=
<r#7ided further that the #'23&% credit of the additional d$t0 le)ia,le $nder s$,1section (5) of section 3 of
the #$stoms %ariff &ct, in res!ect of ca!ital "oods shall ,e allo.ed immediatel0 on recei!t of the ca!ital "oods in
the factor0 of a man$fact$rer=
78
<r#7ided als# that .here an assessee is eli"i,le to a)ail of the exem!tion $nder a notification ,ased on the )al$e
of clearances in a financial 0ear, the #'23&% credit in res!ect of ca!ital "oods recei)ed ,0 s$ch assessee shall ,e
allo.ed for the .hole amo$nt of the d$t0 !aid on s$ch ca!ital "oods in the same financial 0ear=
<r#7ided als# that the #'23&% credit in res!ect of ca!ital "oods ma0 ,e ta/en ,0 the !ro)ider of o$t!$t
ser)ice .hen the ca!ital "oods are deli)ered to s$ch !ro)ider, s$,-ect to maintenance of doc$mentar0 e)idence of
deli)er0 and location of the ca!ital "oods=
E1$la"ati#".( +or the remo)al of do$,ts, it is here,0 clarified that an assessee shall ,e eli"i,le if his a""re"ate
)al$e of clearances of all excisa,le "oods for home cons$m!tion in the !recedin" financial 0ear com!$ted in the
manner s!ecified in the said notification did not exceed r$!ees fo$r h$ndred la/hs=
(,) %he ,alance of #'23&% credit ma0 ,e ta/en in an0 financial 0ear s$,se@$ent to the financial 0ear in
.hich the ca!ital "oods .ere recei)ed in the factor0 of the man$fact$rer, or in the !remises of the !ro)ider of o$t!$t
ser)ice, if the ca!ital "oods, other than com!onents, s!ares and accessories, refractories and refractor0 materials,
mo$lds and dies and "oods fallin" $nder headin" 6805, "rindin" .heels and the li/e, and !arts thereof fallin" $nder
headin" 6804 of the +irst Sched$le to the 'xcise %ariff &ct, are in the !ossession of the man$fact$rer of final
!rod$cts, or !ro)ider of o$t!$t ser)ice in s$ch s$,se@$ent 0ears=
3llustrati#".( & man$fact$rer recei)ed machiner0 on the 16th da0 of &!ril, 2002 in his factor0= #'23&%
of t.o la/h r$!ees is !aid on this machiner0= %he man$fact$rer can ta/e credit $!to a maxim$m of one la/h r$!ees
in the financial 0ear 200212003, and the ,alance in s$,se@$ent 0ears=
(&) %he #'23&% credit in res!ect of the ca!ital "oods shall ,e allo.ed to a man$fact$rer, !ro)ider of o$t!$t
ser)ice e)en if the ca!ital "oods are ac@$ired ,0 him on lease, hire !$rchase or loan a"reement, from a financin"
com!an0=
(4) %he #'23&% credit in res!ect of ca!ital "oods shall not ,e allo.ed in res!ect of that !art of the )al$e of ca!ital
"oods .hich re!resents the amo$nt of d$t0 on s$ch ca!ital "oods, .hich the man$fact$rer or !ro)ider of o$t!$t
ser)ice claims as de!reciation $nder section 32 of the 7ncome1tax &ct, 1961( 43 of 1961)=
(') (a) %he #'23&% credit shall ,e allo.ed e)en if an0 in!$ts or ca!ital "oods as s$ch or after ,ein" !artiall0
!rocessed are sent to a -o, .or/er for f$rther !rocessin", testin", re!air, re1conditionin" or for the man$fact$re of
intermediate "oods necessar0 for the man$fact$re of final !rod$cts or an0 other !$r!ose, and it is esta,lished from
the records, challans or memos or an0 other doc$ment !rod$ced ,0 the man$fact$rer or !ro)ider of o$t!$t ser)ice
ta/in" the #'23&% credit that the "oods are recei)ed ,ac/ in the factor0 .ithin one h$ndred and ei"ht0 da0s of
their ,ein" sent to a -o, .or/er and if the in!$ts or the ca!ital "oods are not recei)ed ,ac/ .ithin one h$ndred
ei"ht0 da0s, the man$fact$rer or !ro)ider of o$t!$t ser)ice shall !a0 an amo$nt e@$i)alent to the #'23&% credit
attri,$ta,le to the in!$ts or ca!ital "oods ,0 de,itin" the #'23&% credit or other.ise, ,$t the man$fact$rer or
!ro)ider of o$t!$t ser)ice can ta/e the #'23&% credit a"ain .hen the in!$ts or ca!ital "oods are recei)ed ,ac/ in
his factor0 or in the !remises of the !ro)ider of o$t!$t ser)ice
(,) %he #'23&% credit shall also ,e allo.ed in res!ect of -i"s, fixt$res, mo$lds and dies sent ,0 a
man$fact$rer of final !rod$cts to,1
(i) another man$fact$rer for the !rod$ction of "oods? or
(ii) a -o, .or/er for the !rod$ction of "oods on his ,ehalf, accordin" to his s!ecifications
(*) %he De!$t0 #ommissioner of #entral 'xcise or the &ssistant #ommissioner of #entral 'xcise, as the case ma0
,e, ha)in" -$risdiction o)er the factor0 of the man$fact$rer of the final !rod$cts .ho has sent the in!$t or !artiall0
!rocessed in!$ts o$tside his factor0 to a -o,1.or/er ma0, ,0 an order, .hich shall ,e )alid for a financial 0ear, in
res!ect of remo)al of s$ch in!$t or !artiall0 !rocessed in!$t, and s$,-ect to s$ch conditions as he ma0 im!ose in the
interest of re)en$e incl$din" the manner in .hich d$t0, if le)ia,le, is to ,e !aid, allo. final !rod$cts to ,e cleared
from the !remises of the -o,1.or/er=
(+) %he #'23&% credit in res!ect of in!$t ser)ice shall ,e allo.ed, on or after the da0 on .hich the in)oice, ,ill or,
as the case ma0 ,e, challan referred to in r$le 9 is recei)ed<
<r#7ided that in case of an in!$t ser)ice .here the ser)ice tax is !aid on re)erse char"e ,0 the reci!ient of the
ser)ice, the #'23&% credit in res!ect of s$ch in!$t ser)ice shall ,e allo.ed on or after the da0 on .hich !a0ment
is made of the )al$e of in!$t ser)ice and the ser)ice tax !aid or !a0a,le as indicated in in)oice, ,ill or, as the case
ma0 ,e, challan referred to in r$le 9<
<r#7ided further that in case the !a0ment of the )al$e of in!$t ser)ice and the ser)ice tax !aid or !a0a,le as
indicated in the in)oice, ,ill or, as the case ma0 ,e, challan referred to in r$le 9, is not made .ithin three months of
the date of the in)oice, ,ill or, as the case ma0 ,e, challan, the man$fact$rer or the ser)ice !ro)ider .ho has ta/en
credit on s$ch in!$t ser)ice, shall !a0 an amo$nt e@$al to the #'23&% credit a)ailed on s$ch in!$t ser)ice and in
case the said !a0ment is made, the man$fact$rer or o$t!$t ser)ice !ro)ider, as the case ma0 ,e, shall ,e entitled to
79
ta/e the credit of the amo$nt e@$i)alent to the #'23&% credit !aid earlier s$,-ect to the other !ro)isions of these
r$les<
<r#7ided als# that if an0 !a0ment or !art thereof, made to.ards an in!$t ser)ice is ref$nded or a credit note is
recei)ed ,0 the man$fact$rer or the ser)ice !ro)ider .ho has ta/en credit on s$ch in!$t ser)ice, he shall !a0 an
amo$nt e@$al to the #'23&% credit a)ailed in res!ect of the amo$nt so ref$nded or credited<
<r#7ided als# that #'23&% credit in res!ect of an in)oice, ,ill or, as the case ma0 ,e, challan referred to in r$le
9, iss$ed ,efore the 1
st
da0 of &!ril, 2011 shall ,e allo.ed, on or after the da0 on .hich !a0ment is made of the
)al$e of in!$t ser)ice and the ser)ice tax !aid or !a0a,le as indicated in in)oice, ,ill or, as the case ma0 ,e, challan
referred to in r$le 9=
Explanation I.- %he amo$nt mentioned in this s$,1r$le, $nless s!ecified other.ise, shall ,e !aid ,0 the
man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice ,0 de,itin" the #'23&% credit or other.ise on or ,efore
the 5th da0 of the follo.in" month exce!t for the month of 6arch, .hen s$ch !a0ment shall ,e made on or ,efore
the 31st da0 of the month of 6arch=
Explanation II. - 7f the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice fails to !a0 the amo$nt !a0a,le
$nder this s$,1r$le, it shall ,e reco)ered, in the manner as !ro)ided in r$le 14, for reco)er0 of #'23&% credit
.ron"l0 ta/en=
Explanation III.- 7n case of a man$fact$rer .ho a)ails the exem!tion $nder a notification ,ased on the )al$e of
clearances in a financial 0ear and a ser)ice !ro)ider .ho is an indi)id$al or !ro!rietar0 firm or !artnershi! firm, the
ex!ressions, (follo.in" month* and (month of 6arch* occ$rrin" in s$,1r$le (7) shall ,e read res!ecti)el0 as
(follo.in" @$arter* and (@$arter endin" .ith the month of 6arch=
Rule '. Refu"d #f CENVAT Credit. :
(1) & man$fact$rer .ho clears a final !rod$ct or an intermediate !rod$ct for ex!ort .itho$t !a0ment of d$t0 $nder
,ond or letter of $nderta/in", or a ser)ice !ro)ider .ho !ro)ides an o$t!$t ser)ice .hich is ex!orted .itho$t
!a0ment of ser)ice tax, shall ,e allo.ed ref$nd of #'23&% credit as determined ,0 the follo.in" form$la s$,-ect
to !roced$re, safe"$ards, conditions and limitations, as ma0 ,e s!ecified ,0 the Aoard ,0 notification in the 5fficial
9a>ette<
4ef$nd amo$nt N ('x!ort t$rno)er of "oodsL 'x!ort t$rno)er of ser)ices) x 2et #'23&% credit
%otal t$rno)er
Ghere,1
(&) (4ef$nd amo$nt* means the maxim$m ref$nd that is admissi,le?
(A) (2et #'23&% credit* means total #'23&% credit a)ailed on in!$ts and in!$t ser)ices ,0 the
man$fact$rer or the o$t!$t ser)ice !ro)ider red$ced ,0 the amo$nt re)ersed in terms of s$,1r$le (5#) of r$le 3,
d$rin" the rele)ant !eriod?
(#) ('x!ort t$rno)er of "oods* means the )al$e of final !rod$cts and intermediate !rod$cts cleared d$rin" the
rele)ant !eriod and ex!orted .itho$t !a0ment of #entral 'xcise d$t0 $nder ,ond or letter of $nderta/in"?
(D) ('x!ort t$rno)er of ser)ices* means the )al$e of the ex!ort ser)ice calc$lated in the follo.in" manner,
namel0<1
'x!ort t$rno)er of ser)ices N !a0ments recei)ed d$rin" the rele)ant !eriod for ex!ort ser)ices L ex!ort ser)ices
.hose !ro)ision has ,een com!leted for .hich !a0ment had ,een recei)ed in ad)ance in an0 !eriod !rior to the
rele)ant !eriod F ad)ances recei)ed for ex!ort ser)ices for .hich the !ro)ision of ser)ice has not ,een com!leted
d$rin" the rele)ant !eriod?
(') (%otal t$rno)er* means s$m total of the )al$e of 1
(a) all excisa,le "oods cleared d$rin" the rele)ant !eriod incl$din" exem!ted "oods, d$tia,le "oods and
excisa,le "oods ex!orted?
(,) ex!ort t$rno)er of ser)ices determined in terms of cla$se (D) of s$,1r$le (1) a,o)e and the )al$e of all
other ser)ices, d$rin" the rele)ant !eriod? and
(c) all in!$ts remo)ed as s$ch $nder s$,1r$le (5) of r$le 3 a"ainst an in)oice, d$rin" the !eriod for .hich the
claim is filed=
(2) %his r$le shall a!!l0 to ex!orts made on or after the 1st &!ril, 2012<
80
<r#7ided that the ref$nd ma0 ,e claimed $nder this r$le, as existin", !rior to the commencement of the #'23&%
#redit (%hird &mendment) 4$les, 2012, .ithin a !eriod of one 0ear from s$ch commencement<
<r#7ided further that no ref$nd of credit shall ,e allo.ed if the man$fact$rer or !ro)ider of o$t!$t ser)ice a)ails of
dra.,ac/ allo.ed $nder the #$stoms and #entral 'xcise D$ties and Ser)ice %ax Dra.,ac/ 4$les, 1995, or claims
re,ate of d$t0 $nder the #entral 'xcise 4$les, 2002, in res!ect of s$ch d$t0? or claims re,ate of ser)ice tax $nder
the Ser)ice %ax 4$les, 1994 in res!ect of s$ch tax=
Explanation 1.- +or the !$r!oses of this r$le,1
(1) (ex!ort ser)ice* means a ser)ice .hich is !ro)ided as !er r$le 6& of the Ser)ice %ax 4$les 1994, .hether the
!a0ment is recei)ed or not?
(2) (rele)ant !eriod* means the !eriod for .hich the claim is filed=
Explanation 2.-+or the !$r!oses of this r$le, the )al$e of ser)ices, shall ,e determined in the same manner as the
)al$e for the !$r!oses of s$,1r$le (3) and (3&) of r$le 6 is determined=
Rule 'A( Refu"d #f CENVAT credit t# u"its i" s$ecified areas.(
2ot.ithstandin" an0thin" contrar0 contained in these r$les, .here a man$fact$rer has cleared final !rod$cts in
terms of notification of the 9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of 4e)en$e) 2o=20B20071
#entral 'xcise, dated the 25th &!ril, 2007 and is $na,le to $tili>e the #'23&% credit of d$t0 ta/en on in!$ts
re@$ired for man$fact$re of final !rod$cts s!ecified in the said notification, other than final !rod$cts .hich are
exem!t or s$,-ect to nil rate of d$t0, for !a0ment of d$ties of excise on said final !rod$cts, then the #entral
9o)ernment ma0 allo. the ref$nd of s$ch credit s$,-ect to s$ch !roced$re, conditions and limitations, as ma0 ,e
s!ecified ,0 notification=
E1$la"ati#". +or the !$r!oses of this r$le, d$t0 means the d$ties s!ecified in s$,1r$le (1) of r$le 3 of these r$les=
Rule '). Refu"d #f CENVAT credit t# ser7ice $r#7iders $r#7idi"g ser7ices ta1ed #" re7erse charge basis.(
& !ro)ider of ser)ice !ro)idin" ser)ices notified $nder s$,1section (2) of section 68 of the +inance &ct and ,ein"
$na,le to $tilise the #'23&% credit a)ailed on in!$ts and in!$t ser)ices for !a0ment of ser)ice tax on s$ch o$t!$t
ser)ices, shall ,e allo.ed ref$nd of s$ch $n$tilised #'23&% credit s$,-ect to !roced$re, safe"$ards, conditions
and limitations, as ma0 ,e s!ecified ,0 the Aoard ,0 notification in the 5fficial 9a>ette=
Rule *. =bligati#" #f a !a"ufacturer #r $r#ducer #f fi"al $r#ducts a"d a $r#7ider #f #ut$ut ser7ice
(1) %he #'23&% credit shall not ,e allo.ed on s$ch @$antit0 of in!$t $sed in or in relation to the man$fact$re of
exem!ted "oods or for !ro)ision of exem!ted ser)ices, or in!$t ser)ice $sed in or in relation to the man$fact$re of
exem!ted "oods and their clearance $!to the !lace of remo)al or for !ro)ision of exem!ted ser)ices exce!t in the
circ$mstances mentioned in s$,1r$le (2)=
<r#7ided that the #'23&% credit on in!$ts shall not ,e denied to -o, .or/er referred to in r$le 12&& of the
#entral 'xcise 4$les, 2002, on the "ro$nd that the said in!$ts are $sed in the man$fact$re of "oods cleared .itho$t
!a0ment of d$t0 $nder the !ro)isions of that r$le=
(2) Ghere a man$fact$rer or !ro)ider of o$t!$t ser)ice a)ails of #'23&% credit in res!ect of an0 in!$ts or in!$t
ser)ices and man$fact$res s$ch final !rod$cts or !ro)ides s$ch o$t!$t ser)ice .hich are char"ea,le to d$t0 or tax as
.ell as exem!ted "oods or ser)ices, then, the man$fact$rer or !ro)ider of o$t!$t ser)ice shall maintain se!arate
acco$nts for1
(a) the recei!t, cons$m!tion and in)entor0 of in!$ts $sed1
(i) in or in relation to the man$fact$re of exem!ted "oods?
(ii) in or in relation to the man$fact$re of d$tia,le final !rod$cts excl$din" exem!ted "oods?
(iii) for the !ro)ision of exem!ted ser)ices?
(i)) for the !ro)ision of o$t!$t ser)ices excl$din" exem!ted ser)ices? and
81
(,) the recei!t and $se of in!$t ser)ices1
(i) in or in relation to the man$fact$re of exem!ted "oods and their clearance $!to the !lace of
remo)al?
(ii) in or in relation to the man$fact$re of d$tia,le final !rod$cts, excl$din" exem!ted "oods, and
their clearance $!to the !lace of remo)al?
(iii) for the !ro)ision of exem!ted ser)ices? and
(i)) for the !ro)ision of o$t!$t ser)ices excl$din" exem!ted ser)ices, and shall ta/e #'23&% credit
onl0 on in!$ts $nder s$,1cla$ses (ii) and (i)) of cla$se (a) and in!$t ser)ices $nder s$,1cla$ses
(ii) and (i)) of cla$se (,)=
(3) 2ot.ithstandin" an0thin" contained in s$,1r$les (1) and (2), the man$fact$rer of "oods or the !ro)ider of o$t!$t
ser)ice, o!tin" not to maintain se!arate acco$nts, shall follo. an0 one of the follo.in" o!tions, as a!!lica,le to
him, namel0<1
(i) !a0 an amo$nt e@$al to six !er cent= of )al$e of the exem!ted "oods and exem!ted ser)ices? or
(ii) !a0 an amo$nt as determined $nder s$,1r$le (3&)? or
(iii) maintain se!arate acco$nts for the recei!t, cons$m!tion and in)entor0 of in!$ts as !ro)ided for in
cla$se (a) of s$,1r$le (2), ta/e #'23&% credit onl0 on in!$ts $nder s$,cla$ses (ii) and (i)) of said
cla$se (a) and !a0 an amo$nt as determined $nder s$,1r$le (3&) in res!ect of in!$t ser)ices= %he
!ro)isions of s$,1cla$ses (i) and (ii) of cla$se (,) and s$,cla$ses (i) and (ii) of cla$se (c) of s$,1r$le
(3&) shall not a!!l0 for s$ch !a0ment<
<r#7ided that if an0 d$t0 of excise is !aid on the exem!ted "oods, the same shall ,e red$ced from the
amo$nt !a0a,le $nder cla$se (i)<
<r#7ided further that if an0 !art of the )al$e of a taxa,le ser)ice has ,een exem!ted on the condition that no
#'23&% credit of in!$ts and in!$t ser)ices, $sed for !ro)idin" s$ch taxa,le ser)ice, shall ,e ta/en then the amo$nt
s!ecified in cla$se (i) shall ,e six !er cent= of the )al$e so exem!ted=*?
<r#7ided that in case of trans!ortation of "oods or !assen"ers ,0 rail the amo$nt re@$ired to ,e !aid $nder
cla$se (i) shall ,e an amo$nt e@$al to 2 !er cent= of )al$e of the exem!ted ser)ices=
Explanation 3.( 7f the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice, a)ails an0 of the o!tion $nder this
s$,1r$le, he shall exercise s$ch o!tion for all exem!ted "oods man$fact$red ,0 him or, as the case ma0 ,e, all
exem!ted ser)ices !ro)ided ,0 him, and s$ch o!tion shall not ,e .ithdra.n d$rin" the remainin" !art of the
financial 0ear=
Explanation II.- +or remo)al of do$,t, it is here,0 clarified that the credit shall not ,e allo.ed on in!$ts $sed
excl$si)el0 in or in relation to the man$fact$re of exem!ted "oods or for !ro)ision of exem!ted ser)ices and on
in!$t ser)ices $sed excl$si)el0 in or in relation to the man$fact$re of exem!ted "oods and their clearance $!to the
!lace of remo)al or for !ro)ision of exem!ted ser)ices=
Explanation III. 1 2o #'23&% credit shall ,e ta/en on the d$t0 or tax !aid on an0 "oods and ser)ices that are
not in!$ts or in!$t ser)ices=
(3&) +or determination and !a0ment of amo$nt !a0a,le $nder cla$se (ii) of s$,1r$le (3), the man$fact$rer of "oods
or the !ro)ider of o$t!$t ser)ice shall follo. the follo.in" !roced$re and conditions, namel0<1
(a) .hile exercisin" this o!tion, the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice shall intimate in
.ritin" to the S$!erintendent of #entral 'xcise "i)in" the follo.in" !artic$lars, namel0<1
(i) name, address and re"istration 2o= of the man$fact$rer of "oods or !ro)ider of o$t!$t
ser)ice?
(ii) date from .hich the o!tion $nder this cla$se is exercised or !ro!osed to ,e exercised?
(iii) descri!tion of d$tia,le "oods or o$t!$t ser)ices?
(i)) descri!tion of exem!ted "oods or exem!ted ser)ices?
()) #'23&% credit of in!$ts and in!$t ser)ices l0in" in ,alance as on the date of exercisin" the
o!tion $nder this condition?
(,) the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice shall, determine and !a0, !ro)isionall0, for
e)er0 month,1
82
(i) the amo$nt e@$i)alent to #'23&% credit attri,$ta,le to in!$ts $sed in or in relation to
man$fact$re of exem!ted "oods, denoted as &?
(ii) the amo$nt of #'23&% credit attri,$ta,le to in!$ts $sed for !ro)ision of exem!ted ser)ices
(!ro)isional)N (AB#) m$lti!lied ,0 D, .here A denotes the total )al$e of exem!ted ser)ices
!ro)ided d$rin" the !recedin" financial 0ear, # denotes the total )al$e of d$tia,le "oods
man$fact$red and remo)ed !l$s the total )al$e of o$t!$t ser)ices !ro)ided !l$s the total
)al$e of exem!ted ser)ices !ro)ided, d$rin" the !recedin" financial 0ear and D denotes total
#'23&% credit ta/en on in!$ts d$rin" the month min$s &?
(iii) the amo$nt attri,$ta,le to in!$t ser)ices $sed in or in relation to man$fact$re of exem!ted
"oods and their clearance $! to the !lace of remo)al or !ro)ision of exem!ted ser)ices
(!ro)isional) N ('B+) m$lti!lied ,0 9, .here ' denotes total )al$e of exem!ted ser)ices
!ro)ided !l$s the total )al$e of exem!ted "oods man$fact$red and remo)ed d$rin" the
!recedin" financial 0ear, + denotes total )al$e of taxa,le and exem!ted ser)ices !ro)ided,
and total )al$e of d$tia,le and exem!ted "oods man$fact$red and remo)ed, d$rin" the
!recedin" financial 0ear, and 9 denotes total #'23&% credit ta/en on in!$t ser)ices d$rin"
the month?
(c) the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice, shall determine finall0 the amo$nt of
#'23&% credit attri,$ta,le to exem!ted "oods and exem!ted ser)ices for the .hole financial 0ear in the follo.in"
manner, namel0<1
(i) the amo$nt of #'23&% credit attri,$ta,le to in!$ts $sed in or in relation to man$fact$re of
exem!ted "oods, on the ,asis of total @$antit0 of in!$ts $sed in or in relation to man$fact$re of
said exem!ted "oods, denoted as D?
(ii) the amo$nt of #'23&% credit attri,$ta,le to in!$ts $sed for !ro)ision of exem!ted ser)ices N
(:B8) m$lti!lied ,0 C, .here : denotes the total )al$e of exem!ted ser)ices !ro)ided d$rin" the
financial 0ear, 8 denotes the total )al$e of d$tia,le "oods man$fact$red and remo)ed !l$s the
total )al$e of o$t!$t ser)ices !ro)ided !l$s the total )al$e of exem!ted ser)ices !ro)ided,
d$rin" the financial 0ear and C denotes total #'23&% credit ta/en on in!$ts d$rin" the
financial 0ear min$s D?
(iii) the amo$nt attri,$ta,le to in!$t ser)ices $sed in or in relation to man$fact$re of exem!ted
"oods and their clearance $! to the !lace of remo)al or !ro)ision of exem!ted ser)ices N (6B2)
m$lti!lied ,0 ;, .here 6 denotes total )al$e of exem!ted ser)ices !ro)ided !l$s the total )al$e
of exem!ted "oods man$fact$red and remo)ed d$rin" the financial 0ear, 2 denotes total )al$e
of o$t!$t and exem!ted ser)ices !ro)ided, and total )al$e of d$tia,le and exem!ted "oods
man$fact$red and remo)ed, d$rin" the financial 0ear, and ; denotes total #'23&% credit
ta/en on in!$t ser)ices d$rin" the financial 0ear?
(d) the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice, shall !a0 an amo$nt e@$al to the difference
,et.een the a""re"ate amo$nt determined as !er condition (c) and the a""re"ate amo$nt determined and !aid as !er
condition (,), on or ,efore the 30
th
:$ne of the s$cceedin" financial 0ear, .here the amo$nt determined as !er
condition (c) is more than the amo$nt !aid?
(e) the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice, shall, in addition to the amo$nt short1!aid,
,e lia,le to !a0 interest at the rate of t.ent01fo$r !er cent= !er ann$m from the d$e date, i=e=, 30
th
:$ne till the date of
!a0ment, .here the amo$nt short1!aid is not !aid .ithin the said d$e date?
(f) .here the amo$nt determined as !er condition (c) is less than the amo$nt determined and !aid as !er
condition (,), the said man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice ma0 ad-$st the excess amo$nt on his
o.n, ,0 ta/in" credit of s$ch amo$nt?
(") the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice shall intimate to the -$risdictional
S$!erintendent of #entral 'xcise, .ithin a !eriod of fifteen da0s from the date of !a0ment or ad-$stment, as !er
condition (d) and (f) res!ecti)el0, the follo.in" !artic$lars, namel0<1
(i) details of #'23&% credit attri,$ta,le to exem!ted "oods and exem!ted ser)ices,
month.ise, for the .hole financial 0ear, determined !ro)isionall0 as !er condition (,),
(ii) #'23&% credit attri,$ta,le to exem!ted "oods and exem!ted ser)ices for the .hole
financial 0ear, determined as !er condition (c)
(iii) amo$nt short !aid determined as !er condition (d), alon".ith the date of !a0ment of the
amo$nt short1!aid,
83
(i)) interest !a0a,le and !aid, if an0, on the amo$nt short1!aid, determined as !er condition (e),
and
()) credit ta/en on acco$nt of excess !a0ment, if an0, determined as !er condition (f)?
(h) .here the amo$nt e@$i)alent to #'23&% credit attri,$ta,le to exem!ted "oods or exem!ted ser)ices
cannot ,e determined !ro)isionall0, as !rescri,ed in condition (,), d$e to reasons that no d$tia,le "oods .ere
man$fact$red and no o$t!$t ser)ice .as !ro)ided in the !recedin" financial 0ear, then the man$fact$rer of "oods or
the !ro)ider of o$t!$t ser)ice is not re@$ired to determine and !a0 s$ch amo$nt !ro)isionall0 for each month, ,$t
shall determine the #'23&% credit attri,$ta,le to exem!ted "oods or exem!ted ser)ices for the .hole 0ear as
!rescri,ed in condition (c) and !a0 the amo$nt so calc$lated on or ,efore 30
th
:$ne of the s$cceedin" financial 0ear=
(i) .here the amo$nt determined $nder condition (h) is not !aid .ithin the said d$e date, i=e=, the 30
th
:$ne,
the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice shall, in addition to the said amo$nt, ,e lia,le to !a0
interest at the rate of t.ent0 fo$r !er cent !er ann$m from the d$e date till the date of !a0ment=
(3A) 2ot.ithstandin" an0thin" contained in s$,1r$les (1), (2) and (3), a ,an/in" com!an0 and a financial instit$tion
incl$din" a non1,an/in" financial com!an0, en"a"ed in !ro)idin" ser)ices ,0 .a0 of extendin" de!osits, loans or
ad)ances, shall !a0 for e)er0 month an amo$nt e@$al to fift0 !er cent= of the #'23&% credit a)ailed on in!$ts and
in!$t ser)ices in that month=
(3D) ;a0ment of an amo$nt $nder s$,1r$le (3) shall ,e deemed to ,e #'23&% credit not ta/en for the !$r!ose of
an exem!tion notification .herein an0 exem!tion is "ranted on the condition that no #'23&% credit of in!$ts and
in!$t ser)ices shall ,e ta/en=
Explanation I. ( (3al$e* for the !$r!ose of s$,1r$les (3) and (3&),O
(a) shall ha)e the same meanin" as assi"ned to it $nder section 67 of the +inance &ct, read .ith r$les made
there$nder or, as the case ma0 ,e, the )al$e determined $nder section 3, 4 or 4& of the 'xcise &ct, read .ith
r$les made there$nder?
(,) in the case of a taxa,le ser)ice, .hen the o!tion a)aila,le $nder s$,1r$les (7),(7&),(7A) or (7#) of r$le 6 of
the Ser)ice %ax 4$les, 1994, has ,een a)ailed, shall ,e the )al$e on .hich the rate of ser)ice tax
$nder section 66A of the +inance &ct, read .ith an exem!tion notification, if an0, relatin" to s$ch rate,
.hen a!!lied for calc$lation of ser)ice tax res$lts in the same amo$nt of tax as calc$lated $nder the o!tion
a)ailed? or
(c) in case of tradin", shall ,e the difference ,et.een the sale !rice and the cost of "oods sold (determined as !er
the "enerall0 acce!ted acco$ntin" !rinci!les .itho$t incl$din" the ex!enses inc$rred to.ards their !$rchase)
or ten !er cent of the cost of "oods sold, .hiche)er is more=
(d) in case of tradin" of sec$rities, shall ,e the difference ,et.een the sale !rice and the !$rchase !rice of the
sec$rities traded or one !er cent= of the !$rchase !rice of the sec$rities traded, .hiche)er is more=
(e) shall not incl$de the )al$e of ser)ices ,0 .a0 of extendin" de!osits, loans or ad)ances in so far as the
consideration is re!resented ,0 .a0 of interest or disco$nt?
E1$la"ati#" 33. 1 %he amo$nt mentioned in s$,1r$les (3), (3&) and (3A) $nless s!ecified other.ise, shall ,e !aid ,0
the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice ,0 de,itin" the #'23&% credit or other.ise on or
,efore the 5th da0 of the follo.in" month exce!t for the month of 6arch, .hen s$ch !a0ment shall ,e made on or
,efore the 31st da0 of the month of 6arch=
E1$la"ati#" 333= 1 7f the man$fact$rer of "oods or the !ro)ider of o$t!$t ser)ice fails to !a0 the amo$nt !a0a,le
$nder s$,1r$le (3), (3&), and (3A), it shall ,e reco)ered, in the manner as !ro)ided in r$le 14, for reco)er0 of
#'23&% credit .ron"l0 ta/en=
E1$la"ati#" 3V.( 7n case of a man$fact$rer .ho a)ails the exem!tion $nder a notification ,ased on the )al$e of
clearances in a financial 0ear and a ser)ice !ro)ider .ho is an indi)id$al or !ro!rietar0 firm or !artnershi! firm, the
ex!ressions, (follo.in" month* and (month of 6arch* occ$rrin" in s$,1r$les (3) and (3&) shall ,e read res!ecti)el0
as (follo.in" @$arter* and (@$arter endin" .ith the month of 6arch=
(4) 2o #'23&% credit shall ,e allo.ed on ca!ital "oods .hich are $sed excl$si)el0 in the man$fact$re of
exem!ted "oods or in !ro)idin" exem!ted ser)ices, other than the final !rod$cts .hich are exem!t from the .hole
of the d$t0 of excise le)ia,le thereon $nder an0 notification .here exem!tion is "ranted ,ased $!on the )al$e or
@$antit0 of clearances made in a financial 0ear=
(6) %he !ro)isions of s$,1r$les (1), (2), (3) and (4) shall not ,e a!!lica,le in case the excisa,le "oods remo)ed
.itho$t !a0ment of d$t0 are either1
(i) cleared to a $nit in a s!ecial economic >one or to a de)elo!er of a s!ecial economic >one for their
a$thori>ed o!erations? or
84
(ii) cleared to a h$ndred !er cent= ex!ort1oriented $nderta/in"? or
(iii) cleared to a $nit in an 'lectronic Dard.are %echnolo"0 ;ar/ or Soft.are %echnolo"0 ;ar/? or
(i)) s$!!lied to the Pnited 2ations or an international or"ani>ation for their official $se or s$!!lied to
!ro-ects f$nded ,0 them, on .hich exem!tion of d$t0 is a)aila,le $nder notification of the
9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of 4e)en$e) 2o=108B951#entral
'xcise, dated the 28th &$"$st, 1995, n$m,er 9= S 4= 602 ('), dated the 28th &$"$st, 1995? or
(i)a) s$!!lied for the $se of forei"n di!lomatic missions or cons$lar missions or career cons$lar offices
or di!lomatic a"ents in terms of the !ro)isions of 12B20121#entral 'xcise, dated the 17th 6arch,
2012, n$m,er 9=S=4= 163('), dated the 17th 6arch, 2012 or
()) cleared for ex!ort $nder ,ond in terms of the !ro)isions of the #entral 'xcise 4$les, 2002? or
()i) "old or sil)er fallin" .ithin #ha!ter 71 of the said +irst Sched$le, arisin" in the co$rse of
man$fact$re of co!!er or >inc ,0 smeltin"? or=
()ii) all "oods .hich are exem!t from the d$ties of c$stoms le)ia,le $nder the +irst Sched$le to
the #$stoms %ariff &ct, 1975 (51 of 1975) and the additional d$t0 le)ia,le $nder s$,1section (1) of
section 3 of the said #$stoms %ariff &ct .hen im!orted into 7ndia and are s$!!lied,O
(a) a"ainst 7nternational #om!etiti)e Aiddin"? or
(,) to a !o.er !ro-ect from .hich !o.er s$!!l0 has ,een tied $! thro$"h tariff ,ased com!etiti)e
,iddin"? or
(c) to a !o.er !ro-ect a.arded to a de)elo!er thro$"h tariff ,ased com!etiti)e ,iddin", in terms
of 12B20121#entral 'xcise, dated the 17th 6arch, 2012
()iii) s$!!lies made for settin" $! of solar !o.er "eneration !ro-ects or facilities

(6&) %he !ro)isions of s$,1r$les (1), (2), (3) and (4) shall not ,e a!!lica,le in case the taxa,le ser)ices are
!ro)ided, .itho$t !a0ment of ser)ice tax, to a Pnit in a S!ecial 'conomic Qone or to a De)elo!er of a S!ecial
'conomic Qone for their a$thorised o!eration=

(7) %he !ro)isions of s$,1r$les (1), (2), (3) and (4) shall not ,e a!!lica,le in case the taxa,le ser)ices are
!ro)ided, .itho$t !a0ment of ser)ice tax, to a $nit in a S!ecial 'conomic Qone or to a de)elo!er of a S!ecial
'conomic Qone for their a$thorised o!erations or .hen a ser)ice is ex!orted,

(8) +or the !$r!ose of this r$le, a ser)ice !ro)ided or a"reed to ,e !ro)ided shall not ,e an exem!ted ser)ice
.hen<1
(a) the ser)ice satisfies the conditions s!ecified $nder r$le 6& of the Ser)ice %ax 4$les, 1994 and the !a0ment
for the ser)ice is to ,e recei)ed in con)erti,le forei"n c$rrenc0? and
(,) s$ch !a0ment has not ,een recei)ed for a !eriod of six months or s$ch extended !eriod as ma0,e allo.ed
from time1to1time ,0 the 4eser)e Aan/ of 7ndia, from the date of !ro)ision=
Rule +. >a""er #f distributi#" #f credit b; i"$ut ser7ice distribut#r. :
%he in!$t ser)ice distri,$tor ma0 distri,$te the #'23&% credit in res!ect of the ser)ice tax !aid on the in!$t
ser)ice to its man$fact$rin" $nits or $nits !ro)idin" o$t!$t ser)ice, s$,-ect to the follo.in" conditions, namel0<O
(a) the credit distri,$ted a"ainst a doc$ment referred to in r$le 9 does not exceed the amo$nt of ser)ice tax !aid
thereon?
(b) credit of ser)ice tax attri,$ta,le to ser)ice $sed in a $nit excl$si)el0 en"a"ed in man$fact$re of exem!ted
"oods or !ro)idin" of exem!ted ser)ices shall not ,e distri,$ted?
(c) credit of ser)ice tax attri,$ta,le to ser)ice $sed .holl0 in a $nit shall ,e distri,$ted onl0 to that $nit? and
(d) credit of ser)ice tax attri,$ta,le to ser)ice $sed in more than one $nit shall ,e distri,$ted pro rata on the
,asis of the t$rno)er d$rin" the rele)ant !eriod of the concerned $nit to the s$m total of the t$rno)er of all
the $nits to .hich the ser)ice relates d$rin" the same !eriod=
Explanation 1.( +or the !$r!oses of this r$le, ($nit* incl$des the !remises of a !ro)ider of o$t!$t ser)ice and the
!remises of a man$fact$rer incl$din" the factor0, .hether re"istered or other.ise=
Explanation 2.- +or the !$r!oses of this r$le, the total t$rno)er shall ,e determined in the same manner as
determined $nder r$le 5=
85
Explanation 3.
(a) %he rele)ant !eriod shall ,e the month !re)io$s to the month d$rin" .hich the #'23&% credit is distri,$ted=
(,) 7n case if an0 of its $nit !a0s tax or d$t0 on @$arterl0 ,asis as !ro)ided in r$le 6 of Ser)ice %ax 4$les,
1994 or r$le 8 of #entral 'xcise 4$les, 2002 then the rele)ant !eriod shall ,e the @$arter !re)io$s to the
@$arter d$rin" .hich the #'23&% credit is distri,$ted=
(c) 7n case of an assessee .ho does not ha)e an0 total t$rno)er in the said !eriod, the in!$t ser)ice distri,$tor shall
distri,$te an0 credit onl0 after the end of s$ch rele)ant !eriod .herein the total t$rno)er of its $nits is
a)aila,le=
Rule +A. 2istributi#" #f credit #" i"$uts b; the #ffice #r a"; #ther $re!ises #f #ut$ut ser7ice $r#7ider.(
(1) & !ro)ider of o$t!$t ser)ice shall ,e allo.ed to ta/e credit on in!$ts and ca!ital "oods recei)ed, on the ,asis of
an in)oice or a ,ill or a challan iss$ed ,0 an office or !remises of the said !ro)ider of o$t!$t ser)ice, .hich recei)es
in)oices, iss$ed in terms of the !ro)isions of the #entral 'xcise 4$les, 2002, to.ards the !$rchase of in!$ts and
ca!ital "oods=
(2) %he !ro)isions of these r$les or an0 other r$les made $nder the #entral 'xcise &ct, 1944, as made a!!lica,le to
a first sta"e dealer or a second sta"e dealer, shall m$tatis m$tandis a!!l0 to s$ch office or !remises of the !ro)ider
of o$t!$t ser)ice==
Rule ,. 0t#rage #f i"$ut #utside the fact#r; #f the !a"ufacturer.(
%he De!$t0 #ommissioner of #entral 'xcise or the &ssistant #ommissioner of #entral 'xcise, as the case ma0 ,e,
ha)in" -$risdiction o)er the factor0 of a man$fact$rer of the final !rod$cts ma0, in exce!tional circ$mstances
ha)in" re"ard to the nat$re of the "oods and shorta"e of stora"e s!ace at the !remises of s$ch man$fact$rer, ,0 an
order, !ermit s$ch man$fact$rer to store the in!$t in res!ect of .hich #'23&% credit has ,een ta/en, o$tside s$ch
factor0, s$,-ect to s$ch limitations and conditions as he ma0 s!ecif0<
;ro)ided that .here s$ch in!$t is not $sed in the manner s!ecified in these r$les for an0 reason .hatsoe)er, the
man$fact$rer of the final !rod$cts shall !a0 an amo$nt e@$al to the credit a)ailed in res!ect of s$ch in!$t=
Rule -. 2#cu!e"ts a"d acc#u"ts.(
(1) %he #'23&% credit shall ,e ta/en ,0 the man$fact$rer or the !ro)ider of o$t!$t ser)ice or in!$t ser)ice
distri,$tor, as the case ma0 ,e, on the ,asis of an0 of the follo.in" doc$ments, namel0 <1
(a) an in)oice iss$ed ,01
(i) a man$fact$rer for clearance of 1
(7) in!$ts or ca!ital "oods from his factor0 or de!ot or from the !remises of the consi"nment a"ent
of the said man$fact$rer or from an0 other !remises from .here the "oods are sold ,0 or on
,ehalf of the said man$fact$rer?
(77) in!$ts or ca!ital "oods as s$ch?
(ii) an im!orter?
(iii) an im!orter from his de!ot or from the !remises of the consi"nment a"ent of the said im!orter if the
said de!ot or the !remises, as the case ma0 ,e, is re"istered in terms of the !ro)isions of #entral
'xcise 4$les, 2002?
(i)) a first sta"e dealer or a second sta"e dealer, as the case ma0 ,e, in terms of the !ro)isions of #entral
'xcise 4$les, 2002? or
(,) a s$!!lementar0 in)oice, iss$ed ,0 a man$fact$rer or im!orter of in!$ts or ca!ital "oods in terms of the
!ro)isions of #entral 'xcise 4$les, 2002 from his factor0 or de!ot or from the !remises of the consi"nment a"ent of
the said man$fact$rer or im!orter or from an0 other !remises from .here the "oods are sold ,0, or on ,ehalf of, the
said man$fact$rer or im!orter, in case additional amo$nt of excise d$ties or additional d$t0 le)ia,le $nder section 3
of the #$stoms %ariff &ct, has ,een !aid, exce!t .here the additional amo$nt of d$t0 ,ecame reco)era,le from the
man$fact$rer or im!orter of in!$ts or ca!ital "oods on acco$nt of an0 non1le)0 or short1le)0 ,0 reason of fra$d,
coll$sion or an0 .ilf$l misstatement or s$!!ression of facts or contra)ention of an0 !ro)isions of the 'xcise &ct, or
of the #$stoms &ct, 1962 (52 of 1962) or the r$les made there $nder .ith intent to e)ade !a0ment of d$t0=
86
E1$la"ati#".( +or remo)al of do$,ts, it is clarified that s$!!lementar0 in)oice shall also incl$de challan or an0
other similar doc$ment e)idencin" !a0ment of additional amo$nt of additional d$t0 le)ia,le $nder section 3 of the
#$stoms %ariff &ct? or
(,,) a s$!!lementar0 in)oice, ,ill or challan iss$ed ,0 a !ro)ider of o$t!$t ser)ice, in terms of the !ro)isions of
Ser)ice %ax 4$les, 1994 exce!t .here the additional amo$nt of tax ,ecame reco)era,le from the !ro)ider of ser)ice
on acco$nt of non1le)0 or non1!a0ment or short1le)0 or short1!a0ment ,0 reason of fra$d or coll$sion or .ilf$l mis1
statement or s$!!ression of facts or contra)ention of an0 of the !ro)isions of the +inance &ct or of the r$les made
there$nder .ith the intent to e)ade !a0ment of ser)ice tax=
(c) a ,ill of entr0? or
(d) a certificate iss$ed ,0 an a!!raiser of c$stoms in res!ect of "oods im!orted thro$"h a +orei"n ;ost 5ffice? or
(e) a challan e)idencin" !a0ment of ser)ice tax, ,0 the ser)ice reci!ient as the !erson lia,le to !a0 ser)ice tax?
or
(f) an in)oice, a ,ill or challan iss$ed ,0 a !ro)ider of in!$t ser)ice on or after the 10th da0 of, Se!tem,er, 2004?
or
(") an in)oice, ,ill or challan iss$ed ,0 an in!$t ser)ice distri,$tor $nder r$le 4& of the Ser)ice %ax 4$les,
1994=
<r#7ided that the credit of additional d$t0 of c$stoms le)ied $nder s$,1section (5) of section 3 of the
#$stoms %ariff &ct, 1975 (51 of 1975) shall not ,e allo.ed if the in)oice or the s$!!lementar0 in)oice, as the case
ma0 ,e, ,ears an indication to the effect that no credit of the said additional d$t0 shall ,e admissi,le?
(2) 2o #'23&% credit $nder s$,1r$le (1) shall ,e ta/en $nless all the !artic$lars as !rescri,ed $nder the #entral
'xcise 4$les, 2002 or the Ser)ice %ax 4$les, 1994, as the case ma0 ,e, are contained in the said doc$ment<
<r#7ided that if the said doc$ment does not contain all the !artic$lars ,$t contains the details of d$t0 or
ser)ice tax !a0a,le, descri!tion of the "oods or taxa,le ser)ice, assessa,le )al$e, #entral 'xcise or Ser)ice %ax
re"istration n$m,er of the !erson iss$in" the in)oice, as the case ma0 ,e, name and address of the factor0 or
.areho$se or !remises of first or second sta"e dealers or !ro)ider of o$t!$t ser)ice, and the De!$t0 #ommissioner
of #entral 'xcise or the &ssistant #ommissioner of #entral 'xcise, as the case ma0 ,e, is satisfied that the "oods or
ser)ices co)ered ,0 the said doc$ment ha)e ,een recei)ed and acco$nted for in the ,oo/s of the acco$nt of the
recei)er, he ma0 allo. the #'23&% credit?
(3) 5mitted
(4) %he #'23&% credit in res!ect of in!$t or ca!ital "oods !$rchased from a first sta"e dealer or second sta"e
dealer shall ,e allo.ed onl0 if s$ch first sta"e dealer or second sta"e dealer, as the case ma0 ,e, has maintained
records indicatin" the fact that the in!$t or ca!ital "oods .as s$!!lied from the stoc/ on .hich d$t0 .as !aid ,0 the
!rod$cer of s$ch in!$t or ca!ital "oods and onl0 an amo$nt of s$ch d$t0 on !ro rata ,asis has ,een indicated in the
in)oice iss$ed ,0 him=
(5) %he man$fact$rer of final !rod$cts or the !ro)ider of o$t!$t ser)ice shall maintain !ro!er records for the recei!t,
dis!osal, cons$m!tion and in)entor0 of the in!$t and ca!ital "oods in .hich the rele)ant information re"ardin" the
)al$e, d$t0 !aid, #'23&% credit ta/en and $tili>ed, the !erson from .hom the in!$t or ca!ital "oods ha)e ,een
!roc$red is recorded and the ,$rden of !roof re"ardin" the admissi,ilit0 of the #'23&% credit shall lie $!on the
man$fact$rer or !ro)ider of o$t!$t ser)ice ta/in" s$ch credit=
(6) %he man$fact$rer of final !rod$cts or the !ro)ider of o$t!$t ser)ice shall maintain !ro!er records for the recei!t
and cons$m!tion of the in!$t ser)ices in .hich the rele)ant information re"ardin" the )al$e, tax !aid, #'23&%
credit ta/en and $tili>ed, the !erson from .hom the in!$t ser)ice has ,een !roc$red is recorded and the ,$rden of
!roof re"ardin" the admissi,ilit0 of the #'23&% credit shall lie $!on the man$fact$rer or !ro)ider of o$t!$t
ser)ice ta/in" s$ch credit=
(7) %he man$fact$rer of final !rod$cts shall s$,mit .ithin ten da0s from the close of each month to the
S$!erintendent of #entral 'xcise, a monthl0 ret$rn in the form s!ecified, ,0 notification, ,0 the Aoard<
<r#7ided that .here a man$fact$rer is a)ailin" exem!tion $nder a notification ,ased on the )al$e or @$antit0 of
clearances in a financial 0ear, he shall file a @$arterl0 ret$rn in the form s!ecified, ,0 notification, ,0 the Aoard
.ithin ten da0s after the close of the @$arter to .hich the ret$rn relates=
(8) & first sta"e dealer or a second sta"e dealer, as the case ma0 ,e, shall s$,mit .ithin fifteen da0s from the close
of each @$arter of a 0ear to the S$!erintendent of #entral 'xcise, a ret$rn in the form s!ecified, ,0 notification, ,0
the Aoard=
<r#7ided that the first sta"e dealer or second sta"e dealer, as the case ma0 ,e, shall s$,mit the said ret$rn
electronicall0
87
(9) %he !ro)ider of o$t!$t ser)ice a)ailin" #'23&% credit, shall s$,mit a half 0earl0 ret$rn in form s!ecified, ,0
notification, ,0 the Aoard to the S$!erintendent of #entral 'xcise, ,0 the end of the month follo.in" the !artic$lar
@$arter or half 0ear=
(10) %he in!$t ser)ice distri,$tor, shall f$rnish a half 0earl0 ret$rn in s$ch form as ma0 ,e s!ecified, ,0 notification,
,0 the Aoard, "i)in" the details of credit recei)ed and distri,$ted d$rin" the said half 0ear to the -$risdictional
S$!erintendent of #entral 'xcise, not later than the last da0 of the month follo.in" the half 0ear !eriod=
(11) %he !ro)ider of o$t!$t ser)ice, a)ailin" #'23&% credit referred to in s$,1r$le (9) or the in!$t ser)ice
distri,$tor referred to in s$,1r$le (10), as the case ma0 ,e, ma0 s$,mit a re)ised ret$rn to correct a mista/e or
omission .ithin a !eriod of sixt0 da0s from the date of s$,mission of the ret$rn $nder s$,1r$le (9) or s$,1r$le (10),
as the case ma0 ,e=
Rule -A. ( 3"f#r!ati#" relati"g t# $ri"ci$al i"$uts. (
(1) & man$fact$rer of final !rod$cts shall f$rnish to the S$!erintendent of #entral 'xcise, ann$all0 ,0 30th &!ril of
each +inancial Rear, a declaration in the +orm s!ecified, ,0 a notification, ,0 the Aoard, in res!ect of each of the
excisa,le "oods man$fact$red or to ,e man$fact$red ,0 him, the !rinci!al in!$ts and the @$antit0 of s$ch !rinci!al
in!$ts re@$ired for $se in the man$fact$re of $nit @$antit0 of s$ch final !rod$cts<
;ro)ided that for the 0ear 2004105, s$ch information shall ,e f$rnished latest ,0 31st Decem,er, 2004=
(2) 7f a man$fact$rer of final !rod$cts intends to ma/e an0 alteration in the information so f$rnished $nder s$,1r$le
(1), he shall f$rnish information to the S$!erintendent of #entral 'xcise to"ether .ith the reasons for s$ch alteration
,efore the !ro!osed chan"e or .ithin 15 da0s of s$ch chan"e in the +orm s!ecified ,0 the Aoard $nder s$,1r$le (1)=
(3) & man$fact$rer of final !rod$cts shall s$,mit, .ithin ten da0s from the close of each month, to the
S$!erintendent of #entral 'xcise, a monthl0 ret$rn in the +orm s!ecified, ,0 a notification, ,0 the Aoard, in res!ect
of information re"ardin" the recei!t and cons$m!tion of each !rinci!al in!$ts .ith reference to the @$antit0 of final
!rod$cts man$fact$red ,0 him=
(4) %he #entral 9o)ernment ma0, ,0 notification and s$,-ect to s$ch conditions or limitations, as ma0 ,e s!ecified
in s$ch notification, s!ecif0 man$fact$rers or class of man$fact$rers .ho ma0 not ,e re@$ired to f$rnish declaration
mentioned in s$,1r$le (1) or monthl0 ret$rn mentioned in s$,1r$le (3)=
(5) ')er0 assessee shall file electronicall0, the declaration or the ret$rn, as the case ma0 ,e, s!ecified in this r$le=
E1$la"ati#"< +or the !$r!oses of this r$le, !rinci!al in!$ts, means an0 in!$t .hich is $sed in the man$fact$re of
final !rod$cts .here the cost of s$ch in!$t constit$tes not less than 10I of the total cost of ra.1materials for the
man$fact$re of $nit @$antit0 of a "i)en final !rod$cts=
Rule 10. Tra"sfer #f CENVAT credit.(
(1) 7f a man$fact$rer of the final !rod$cts shifts his factor0 to another site or the factor0 is transferred on acco$nt of
chan"e in o.nershi! or on acco$nt of sale, mer"er, amal"amation, lease or transfer of the factor0 to a -oint )ent$re
.ith the s!ecific !ro)ision for transfer of lia,ilities of s$ch factor0, then, the man$fact$rer shall ,e allo.ed to
transfer the #'23&% credit l0in" $n$tili>ed in his acco$nts to s$ch transferred, sold, mer"ed, leased or
amal"amated factor0=
(2) 7f a !ro)ider of o$t!$t ser)ice shifts or transfers his ,$siness on acco$nt of chan"e in o.nershi! or on acco$nt of
sale, mer"er, amal"amation, lease or transfer of the ,$siness to a -oint )ent$re .ith the s!ecific !ro)ision for
transfer of lia,ilities of s$ch ,$siness, then, the !ro)ider of o$t!$t ser)ice shall ,e allo.ed to transfer the #'23&%
credit l0in" $n$tili>ed in his acco$nts to s$ch transferred, sold, mer"ed, leased or amal"amated ,$siness=
(3) %he transfer of the #'23&% credit $nder s$,1r$les (1) and (2) shall ,e allo.ed onl0 if the stoc/ of in!$ts as
s$ch or in !rocess, or the ca!ital "oods is also transferred alon" .ith the factor0 or ,$siness !remises to the ne. site
or o.nershi! and the in!$ts, or ca!ital "oods, on .hich credit has ,een a)ailed of are d$l0 acco$nted for to the
satisfaction of the De!$t0 #ommissioner of #entral 'xcise or, as the case ma0 ,e, the &ssistant #ommissioner of
#entral 'xcise=
Rule 10A. Tra"sfer #f CENVAT credit #f additi#"al dut; le7iable u"der sub(secti#" (') #f secti#" & #f
the Cust#!s Tariff Act.?
(1) & man$fact$rer or !rod$cer of final !rod$cts, ha)in" more than one re"istered !remises, for each of .hich
re"istration $nder the #entral 'xcise 4$les, 2002 has ,een o,tained on the ,asis of a common ;ermanent &cco$nt
88
2$m,er $nder the 7ncome1tax &ct, 1961 (43 of 1961), ma0 transfer $n$tilised #'23&% credit of additional d$t0
le)ia,le $nder s$,1section (5) of section 3of the #$stoms %ariff &ct, l0in" in ,alance .ith one of his re"istered
!remises at the end of a @$arter, to his other re"istered !remises ,0O
(i) ma/in" an entr0 for s$ch transfer in the doc$ments maintained $nder r$le 9?
(ii) iss$in" a transfer challan containin" re"istration n$m,er, name and address of the re"istered !remises
transferrin" the credit and recei)in" s$ch credit, the amo$nt of credit transferred and the !artic$lars of s$ch entr0 as
mentioned in cla$se (i),
and s$ch reci!ient !remises ma0 ta/e #'23&% credit on the ,asis of the transfer challan<
;ro)ided that nothin" contained in this s$,1r$le shall a!!l0 if the transferrin" and reci!ient re"istered !remises are
a)ailin" the ,enefit of the follo.in" notifications of the 9o)ernment of 7ndia in the 6inistr0 of +inance
(De!artment of 4e)en$e), namel0<1
(i) 2o= 32B991#entral 'xcise, dated the 8th :$l0, 1999 9=S=4= 508('), dated the 8th :$l0, 1999?
(ii) 2o= 33B991#entral 'xcise, dated the 8th :$l0, 1999 9=S=4= 509('), dated the 8th :$l0, 1999?
(i)) 2o= 56B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9=S=4= 764('), dated the 14th 2o)em,er,
2002?
()) 2o= 57B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9=S=4== 765('), dated the 14th 2o)em,er,
2002?
()i) 2o= 56B20031#entral 'xcise, dated the 25th :$ne, 2003 9=S=4= 513 ('), dated the 25th :$ne, 2003?
()ii) 2o= 71B20031#entral 'xcise, dated the 9th Se!tem,er, 2003 9=S=4= 717 ('), dated the 9th Se!tem,er, 2003?
()iii) 2o=20B20071#entral 'xcise, dated the 25th &!ril, 2007 9=S=4= 307 ('), dated the 25th &!ril, 2007? and
(ix) 2o= 1B20101#entral 'xcise dated the 6th +e,r$ar0, 2010 9=S=4= 62 ('), dated the 6th +e,r$ar0, 2010=

(2) %he man$fact$rer or !rod$cer shall s$,mit the monthl0 ret$rn, as s!ecified $nder these r$les, se!aratel0 in
res!ect of transferrin" and reci!ient re"istered !remises=
Rule 11. Tra"siti#"al $r#7isi#".
(1) &n0 amo$nt of credit earned ,0 a man$fact$rer $nder the #'23&% #redit 4$les, 2002, as the0 existed !rior to
the 10th da0 of Se!tem,er, 2004 or ,0 a !ro)ider of o$t!$t ser)ice $nder the Ser)ice %ax #redit 4$les, 2002, as
the0 existed !rior to the 10th da0 of Se!tem,er, 2004, and remainin" $n$tili>ed on that da0 shall ,e allo.ed as
#'23&% credit to s$ch man$fact$rer or !ro)ider of o$t!$t ser)ice $nder these r$les, and ,e allo.ed to ,e $tili>ed
in accordance .ith these r$les=
(2) & man$fact$rer .ho o!ts for exem!tion from the .hole of the d$t0 of excise le)ia,le on "oods man$fact$red ,0
him $nder a notification ,ased on the )al$e or @$antit0 of clearances in a financial 0ear, and .ho has ,een ta/in"
#'23&% credit on in!$ts or in!$t ser)ices ,efore s$ch o!tion is exercised, shall ,e re@$ired to !a0 an amo$nt
e@$i)alent to the #'23&% credit, if an0, allo.ed to him in res!ect of in!$ts l0in" in stoc/ or in !rocess or
contained in final !rod$cts l0in" in stoc/ on the date .hen s$ch o!tion is exercised and after ded$ctin" the said
amo$nt from the ,alance, if an0, l0in" in his credit, the ,alance, if an0, still remainin" shall la!se and shall not ,e
allo.ed to ,e $tili>ed for !a0ment of d$t0 on an0 excisa,le "oods, .hether cleared for home cons$m!tion or for
ex!ort=
(3) & man$fact$rer or !rod$cer of a final !rod$ct shall ,e re@$ired to !a0 an amo$nt e@$i)alent to the #'23&%
credit, if an0, ta/en ,0 him in res!ect of in!$ts recei)ed for $se in the man$fact$re of the said final !rod$ct and is
l0in" in stoc/ or in !rocess or is contained in the final !rod$ct l0in" in stoc/, if,1
89
(i) he o!ts for exem!tion from .hole of the d$t0 of excise le)ia,le on the said final !rod$ct man$fact$red or
!rod$ced ,0 him $nder a notification iss$ed $nder section 5& of the &ct? or
(ii) the said final !rod$ct has ,een exem!ted a,sol$tel0 $nder section 5& of the &ct, and after ded$ctin" the said
amo$nt from the ,alance of #'23&% credit, if an0, l0in" in his credit, the ,alance, if an0, still remainin" shall
la!se and shall not ,e allo.ed to ,e $tili>ed for !a0ment of d$t0 on an0 other final !rod$ct .hether cleared for
home cons$m!tion or for ex!ort, or for !a0ment of ser)ice tax on an0 o$t!$t ser)ice, .hether !ro)ided in 7ndia or
ex!orted=
(4) & !ro)ider of o$t!$t ser)ice shall ,e re@$ired to !a0 an amo$nt e@$i)alent to the #'23&% credit, if an0, ta/en
,0 him in res!ect of in!$ts recei)ed for !ro)idin" the said ser)ice and is l0in" in stoc/ or is contained in the
taxa,le ser)ice !endin" to ,e !ro)ided, .hen he o!ts for exem!tion from !a0ment of .hole of the ser)ice tax
le)ia,le on s$ch taxa,le ser)ice $nder a notification iss$ed $nder section 93 of the +inance &ct, 1994(32 of 1994)
and after ded$ctin" the said amo$nt from the ,alance of #'23&% credit, if an0, l0in" in his credit, the ,alance, if
an0, still remainin" shall la!se and shall not ,e allo.ed to ,e $tili>ed for !a0ment of d$t0 on an0 excisa,le "oods,
.hether cleared for home cons$m!tion or for ex!ort or for !a0ment of ser)ice tax on an0 other o$t!$t ser)ice,
.hether !ro)ided in 7ndia or ex!orted=
Rule 12. 0$ecial dis$e"sati#" i" res$ect #f i"$uts !a"ufactured i" fact#ries l#cated i" s$ecified areas #f
N#rth East regi#", @utch district #f /ujarat, 0tate #f Aa!!u a"d @ash!ir a"d 0tate #f 0ii!.(
2ot.ithstandin" an0thin" contained in these r$les ,$t s$,-ect to the !ro)iso to cla$se (i) of s$, r$le (1) of the r$le 3,
.here a man$fact$rer has cleared an0 in!$ts or ca!ital "oods, in terms of notifications of the 9o)ernment of 7ndia
in the 6inistr0 of +inance (De!artment of 4e)en$e) 2o= 32B991 #entral 'xcise, dated the 8th :$l0, 1999 9=S=4=
508('), dated the 8th :$l0, 1999 or 2o= 33B991 #entral 'xcise, dated the 8th :$l0, 1999 9=S=4= 509('), dated the 8th
:$l0, 1999 or 2o= 39B20011#entral 'xcise, dated the 31st :$l0, 2001 9=S=4= 565('), dated the 31st :$l0, 2001 or
notification of the 9o)ernment of 7ndia in the erst.hile 6inistr0 of +inance and #om!an0 &ffairs (De!artment of
4e)en$e) 2o=56B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9=S=4= 764('), dated 14th 2o)em,er, 2002or
2o=57B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9S4 765('), dated the 14th 2o)em,er, 2002 or
notification of the 9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of 4e)en$e) 2o= 56B20031#entral
'xcise, dated the 25th :$ne, 2003 9=S=4= 513 ('), dated the 25th :$ne, 2003 or 71B20031#entral 'xcise, dated the
9th Se!tem,er, 2003 9=S=4=717 ('), dated the 9th Se!tem,er, 2003 or 2o=20B20071#entral 'xcise, dated the
25
th
&!ril, 2007 9S4 307 ('), dated the 25
th
&!ril, 2007, the #'23&% credit on s$ch in!$ts or ca!ital "oods shall
,e admissi,le as if no !ortion of the d$t0 !aid on s$ch in!$ts or ca!ital "oods .as exem!ted $nder an0 of the said
notifications=
Rule 12A. <r#cedure a"d facilities f#r large ta1$a;er.(
2ot.ithstandin" an0thin" contained in these r$les, the follo.in" !roced$re shall a!!l0 to a lar"e tax!a0er,1
(1) & lar"e tax!a0er ma0 remo)e in!$ts, exce!t motor s!irit, commonl0 /no.n as !etrol, hi"h s!eed diesel and li"ht
diesel oil or ca!ital "oods, as s$ch, on .hich #'23&% credit has ,een ta/en, .itho$t !a0ment of an amo$nt
s!ecified in s$,1r$le (5) of r$le 3 of these r$les, $nder the co)er of a transfer challan or in)oice, from an0 of his
re"istered !remises (hereinafter referred to as the sender !remises) to his other re"istered !remises, other than a
!remises of a first or second sta"e dealer (hereinafter referred to as the reci!ient !remises), for f$rther $se in the
man$fact$re or !rod$ction of final !rod$cts in reci!ient !remises s$,-ect to condition that
(a) the final !rod$cts are man$fact$red or !rod$ced $sin" the said in!$ts and cleared on !a0ment of a!!ro!riate
d$ties of excise le)ia,le thereon .ithin a !eriod of six months, from the date of recei!t of the in!$ts in the reci!ient
!remises? or
(,) the final !rod$cts are man$fact$red or !rod$ced $sin" the said in!$ts and ex!orted o$t of 7ndia, $nder ,ond
or letter of $nderta/in" .ithin a !eriod of six months, from the date of recei!t of the in!$t "oods in the reci!ient
!remises,
and that an0 other conditions !rescri,ed ,0 the #ommissioner of #entral 'xcise, Car"e %ax!a0er Pnit in this
re"ard are satisfied<
E1$la"ati#" 1. %he transfer challan or in)oice shall ,e seriall0 n$m,ered and shall contain the re"istration
n$m,er, name, address of the lar"e tax!a0er, descri!tion, classification, time and date of remo)al, mode of trans!ort
and )ehicle re"istration n$m,er, @$antit0 of the "oods and re"istration n$m,er and name of the consi"nee<
;ro)ided that if the final !rod$cts man$fact$red or !rod$ced $sin" the said in!$ts are not cleared on !a0ment of
a!!ro!riate d$ties of excise le)ia,le thereon or are not ex!orted o$t of 7ndia .ithin the said !eriod of six months
from the date of recei!t of the in!$t "oods in the reci!ient !remises, or s$ch in!$ts are cleared as s$ch from the
90
reci!ient !remises, an amo$nt e@$al to the credit ta/en in res!ect of s$ch in!$ts ,0 the sender !remises shall ,e !aid
,0 the reci!ient !remises .ith interest in the manner and rate s!ecified $nder r$le 14 of these r$les<
;ro)ided f$rther that if s$ch ca!ital "oods are $sed excl$si)el0 in the man$fact$re of exem!ted "oods, or s$ch
ca!ital "oods are cleared as s$ch from the reci!ient !remises, an amo$nt e@$al to the credit ta/en in res!ect of s$ch
ca!ital "oods ,0 the sender !remises shall ,e !aid ,0 the reci!ient !remises .ith interest in the manner and rate
s!ecified $nder r$le 14 of these r$les<
E1$la"ati#" 2. 7f a lar"e tax!a0er fails to !a0 an0 amo$nt d$e in terms of the first and second !ro)iso, it shall
,e reco)ered alon" .ith interest in the manner as !ro)ided $nder r$le 14 of these r$les<
;ro)ided also that nothin" contained in this s$,1r$le shall ,e a!!lica,le if the reci!ient !remises is a)ailin"
follo.in" notifications of 9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of 4e)en$e), 1
(i)) 2o= 56B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9=S=4= 764('), dated the 14th 2o)em,er,
2002?
2002?
2003<
()iii) 2o=20B20071#entral 'xcise, dated the 25th &!ril, 2007 9S4 307 ('), dated the 25th &!ril, 2007M?
(ix) 2o= 1B20101#entral 'xcise, dated the 6th +e,r$ar0, 2010 9=S=4= 62 ('), dated the 6th +e,r$ar0, 2010M
;ro)ided also that nothin" contained in this s$,1r$le shall ,e a!!lica,le to a ex!ort oriented $nit or a $nit
located in a 'lectronic Dard.are %echnolo"0 ;ar/ or Soft.are %echnolo"0 ;ar/=
(2) %he first reci!ient !remises ma0 ta/e #'23&% credit of the amo$nt !aid $nder first !ro)iso to s$,1r$le(1) as if
it .as a d$t0 !aid ,0 the sender !remises .ho remo)ed s$ch "oods on the ,asis of a doc$ment sho.in" !a0ment of
s$ch d$ties=
(3) #'23&% credit of the s!ecified d$ties ta/en ,0 a sender !remises shall not ,e denied or )aried in res!ect of an0
in!$ts or ca!ital "oods,
(a) remo)ed as s$ch $nder s$,1r$le (1) on the "ro$nd that the said in!$ts or the ca!ital "oods ha)e ,een
remo)ed .itho$t !a0ment of an amo$nt s!ecified in s$,1r$le (5) of r$le 3 of these r$les? or
(,) on the "ro$nd that the said in!$ts or ca!ital "oods ha)e ,een $sed in the man$fact$re of an0 intermediate
"oods remo)ed .itho$t !a0ment of d$t0 $nder s$,1r$le (1) of r$le 12AA of #entral 'xcise 4$les, 2002=
E1$la"ati#" . +or the !$r!ose of this s$,1r$le intermediate "oods shall ha)e the same meanin" assi"ned to it in
s$,1r$le (1) of r$le 12AA of the #entral 'xcise 4$les, 2002=
(4) & lar"e tax!a0er ma0 transfer, #'23&% credit a)aila,le .ith one of his re"istered man$fact$rin" !remises or
!remises !ro)idin" taxa,le ser)ice to his other s$ch re"istered !remises ,0,1
(i) ma/in" an entr0 for s$ch transfer in the record maintained $nder r$le 9?
(ii) iss$in" a transfer challan containin" re"istration n$m,er, name and address of the re"istered !remises
transferrin" the credit as .ell as recei)in" s$ch credit, the amo$nt of credit transferred and the !artic$lars of s$ch
entr0 as mentioned in cla$se (i),
and s$ch reci!ient !remises can ta/e #'23&% credit on the ,asis of s$ch transfer challan as mentioned in
cla$se (ii)<
;ro)ided that s$ch transfer or $tilisation of #'23&% credit shall ,e s$,-ect to the limitations !rescri,ed $nder
cla$se (,) of s$,1r$le (7) of r$le 3=
;ro)ided f$rther that nothin" contained in this s$,1r$le shall ,e a!!lica,le if the re"istered man$fact$rin"
!remises is a)ailin" follo.in" notifications of 9o)ernment of 7ndia in the 6inistr0 of +inance (De!artment of
4e)en$e), 1
91
(i)) 2o= 56B20021#entral 'xcise, dated the 14th 2o)em,er, 2002 9=S=4= 764('), dated the 14th
2o)em,er, 2002?
2002?
2003<
()iii) 2o=20B20071#entral 'xcise, dated the 25th &!ril, 2007 9S4 307 ('), dated the 25th &!ril, 2007M
(ix) 2o= 1B20101#entral 'xcise, dated the 6th +e,r$ar0, 2010 9=S=4= 62 ('), dated the 6th +e,r$ar0, 2010M
(5) & lar"e tax!a0er shall s$,mit a monthl0 ret$rn, as !rescri,ed $nder these r$les, for each of the re"istered
!remises=
(6) &n0 notice iss$ed ,$t not ad-$d"ed ,0 an0 of the #entral 'xcise officer administerin" the &ct or r$les made
there$nder immediatel0 ,efore the date of "rant of acce!tance ,0 the #hief #ommissioner of #entral 'xcise, Car"e
%ax!a0er Pnit, shall ,e deemed to ha)e ,een iss$ed ,0 #entral 'xcise officers of the said Pnit
(7) ;ro)isions of these r$les, in so far as the0 are not inconsistent .ith the !ro)isions of this r$le shall m$tatis
m$tandis a!!l0 in case of a lar"e tax!a0er=
Rule 12AAA. <#4er t# i!$#se restricti#"s i" certai" t;$es #f cases.(
2ot.ithstandin" an0thin" contained in these r$les, .here the #entral 9o)ernment, ha)in" re"ard to the extent of
mis$se of #'23&% credit, nat$re and t0!e of s$ch mis$se and s$ch other factors as ma0 ,e rele)ant, is of the
o!inion that in order to !re)ent the mis$se of the !ro)isions of #'23&% credit as s!ecified in these r$les, it is
necessar0 in the !$,lic interest to !ro)ide for certain meas$res incl$din" restrictions on a man$fact$rer, first sta"e
and second sta"e dealer or an ex!orter, ma0 ,0 a notification in the 5fficial 9a>ette, s!ecif0 the nat$re of
restrictions incl$din" restrictions on $tili>ation of #'23&% credit and s$s!ension of re"istration in case of a dealer
and t0!e of facilities to ,e .ithdra.n and !roced$re for iss$e of s$ch order ,0 an officer a$thori>ed ,0 the Aoard=
Rule 1&. <#4er #f Ce"tral /#7er"!e"t t# "#tif; g##ds f#r dee!ed CENVAT credit.(
2ot.ithstandin" an0thin" contained in r$le 3, the #entral 9o)ernment ma0, ,0 notification, declare the in!$t or
in!$t ser)ice on .hich the d$ties of excise, or additional d$t0 of c$stoms or ser)ice tax !aid, shall ,e deemed to
ha)e ,een !aid at s$ch rate or e@$i)alent to s$ch amo$nt as ma0 ,e s!ecified in that notification and allo.
#'23&% credit of s$ch d$t0 or tax deemed to ha)e ,een !aid in s$ch manner and s$,-ect to s$ch conditions as ma0
,e s!ecified in that notification e)en if, in the case of in!$t, the declared in!$t, or in the case of in!$t ser)ice, the
declared in!$t ser)ice, as the case ma0 ,e, is not $sed directl0 ,0 the man$fact$rer of final !rod$cts, or as the case
ma0 ,e, ,0 the o$t!$t ser)ice, declared in that notification, ,$t contained in the said final !rod$cts, or as the case
ma0 ,e, $sed in !ro)idin" the o$t!$t ser)ice=
Rule 14. Rec#7er; #f CENVAT credit 4r#"gl; tae" #r err#"e#usl; refu"ded.(
Ghere the #'23&% credit has ,een
1
ta/en and $tilised .ron"l0 or has ,een erroneo$sl0 ref$nded, the same alon"
.ith interest shall ,e reco)ered from the man$fact$rer or the !ro)ider of the o$t!$t ser)ice and the !ro)isions of
sections 11& and 11&& of the 'xcise &ct or sections 73 and 75 of the +inance &ct, shall a!!l0 m$tatis m$tandis for
effectin" s$ch reco)eries=
Rule 1'. C#"fiscati#" a"d $e"alt;.(
(1) 7f an0 !erson, ta/es or $tilises #'23&% credit in res!ect of in!$t or ca!ital "oods or in!$t ser)ices, .ron"l0 or
in contra)ention of an0 of the !ro)isions of these r$les, then, all s$ch "oods shall ,e lia,le to confiscation and s$ch
!erson, shall ,e lia,le to a !enalt0 not exceedin" the d$t0 or ser)ice tax on s$ch "oods or ser)ices, as the case ma0
,e, or t.o tho$sand r$!ees, .hiche)er is "reater=
92
(2) 7n a case, .here the #'23&% credit in res!ect of in!$t or ca!ital "oods or in!$t ser)ices has ,een ta/en or
$tilised .ron"l0 ,0 reason of fra$d, coll$sion or an0 .ilf$l mis1statement or s$!!ression of facts, or contra)ention
of an0 of the !ro)isions of the 'xcise &ct, or of the r$les made there$nder .ith intent to e)ade !a0ment of d$t0,
then, the man$fact$rer shall also ,e lia,le to !a0 !enalt0 in terms of the !ro)isions of section 11&# of the 'xcise
&ct=
(3) 7n a case, .here the #'23&% credit in res!ect of in!$t or ca!ital "oods or in!$t ser)ices has ,een ta/en or
$tilised .ron"l0 ,0 reason of fra$d, coll$sion or an0 .ilf$l mis1statement or s$!!ression of facts, or contra)ention
of an0 of the !ro)isions of these r$les or of the +inance &ct or of the r$les made there$nder .ith intent to e)ade
!a0ment of ser)ice tax, then, the !ro)ider of o$t!$t ser)ice shall also ,e lia,le to !a0 !enalt0 in 78 of the +inance
&ct=
(4) &n0 order $nder s$,1r$le (1), s$,1r$le (2) or s$,1r$le (3) shall ,e iss$ed ,0 the #entral 'xcise 5fficer follo.in"
the !rinci!les of nat$ral -$stice=
Rule 1'A. /e"eral $e"alt;.(
Ghoe)er contra)enes the !ro)isions of these r$les for .hich no !enalt0 has ,een !ro)ided in the r$les, he shall ,e
lia,le to a !enalt0 .hich ma0 extend to fi)e tho$sand r$!ees=
Rule 1*. 0u$$le!e"tar; $r#7isi#".(
(1) &n0 notification, circ$lar, instr$ction, standin" order, trade notice or other order iss$ed $nder the #'23&%
#redit 4$les, 2002 or the Ser)ice %ax #redit 4$les, 2002, ,0 the #entral 9o)ernment, the #entral Aoard of 'xcise
and #$stoms, the #hief #ommissioner of #entral 'xcise or the #ommissioner of #entral 'xcise, and in force at the
commencement of these r$les, shall, to the extent it is rele)ant and consistent .ith these r$les, ,e deemed to ,e )alid
and iss$ed $nder the corres!ondin" !ro)isions of these r$les=
(2) 4eferences in an0 r$le, notification, circ$lar, instr$ction, standin" order, trade notice or other order to the
#'23&% #redit 4$les, 2002 and an0 !ro)ision thereof or, as the case ma0 ,e, the Ser)ice %ax #redit 4$les, 2002
and an0 !ro)ision thereof shall, on the commencement of these r$les, ,e constr$ed as references to the #'23&%
#redit 4$les, 2004 and an0 corres!ondin" !ro)ision thereof=
93

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