Amendment in Rule 11 of CER

[JAMES PG]

Rule 11 of CER is amended vide Not 8/2015 so as to facilitate a registered dealer to issue Cenvatable Invoice without receipt of goods at his registered premises. As per the amended provisions, manufacturer may issue an Invoice showing consignee as the ultimate recipient the Dealer as the buyer. Credit is allowed on the basis of Dealer Invoice issued and not based on the manufacturer’s Invoice. But manufacturer’s Invoice showing recipient name as consignee is also a valid document for Cenvat as has been clarified in Circular No 96/7/95-CX dated 13-2-1995. There are views that in view of the amendment, all unregistered dealers who carry on trade based on transit sale basis need to register for enabling the recipients to avail Cenvat credit and also manufacturer’s Invoice showing a Regd Dealer as buyer is invalid for credit. Views of the learned members are awaited on this.

[Rajagopalan Ranganathan]

Sir,

In view of the amendment made to Rule 11 of Central Excise Rules, 2002 the circular dated 13.2.1995 will have no effect because it is held CESTAT/High Courts that circular issued by CBEC cannot over rule the provisions of Central Excise Rules. However the ambiguity will continue and it will certainly lead to unnecessary litigation unless CBEC modifies its instructions dated 13.2.1995. In my opinion in view of the amendment carried out to the rules, CBEC has to issue fresh instruction clarifying the position.

[JAMES PG]

Sir,

Thanks for your response. Even if we disregard the Circular also, as per Rule 9(1) a of CCR, an Invoice issued by a manufacturer for clearance of goods from his factory is a valid document. Rule 11 (2) of CER states that Inv shall be serially numbered, shall contain regn no, address of the concerned CE Dn, name of the consignee etc. Name of the consignee is already appearing in transit sale cases and hence the conditions as per proviso to Rule 9(1)  is satisfied. It is felt that unless CCR is amended, it cannot be viewed that all Dealer Inv as per Rule 11 is to be used for all credit availment for transit sales by Regd/Un Regd traders

[YAGAY and SUN]

While surfing on the internet, we have come across with the following “Replies to queries arising out of budget changes”. [Source of Information: www.dateyvs.com]

Question- As per thirdprovisoto rule 11(2) of Central Excise Rules, inserted w.e.f. 1-3-2015, a registered dealer who has purchased goods can instruct manufacturing manufacturer to send goods directly to the ultimate purchaser manufacturer (or purchasing service provider). Details of registered dealer as buyer and buyer manufacturer (or purchasing service provider) receiving the goods shall be shown as consignee. The purchase manufacturer (or purchasing service provider can take Cenvat credit on basis of dealer’s invoice.

Earlier, the manufacturer could take Cenvat credit even if the dealer was unregistered. Now, it is essential that the dealer must be registered?

Answer- Really, this is only a facility to registered dealer to reduce transport costs as earlier he was required to bring the goods in his depot/godown before making a sale. This facility to registered dealer cannot be interpreted to mean that purchase through unregistered dealer is not permitted. The earlier procedure and case law is still valid. InUOIv.Rajasthan Spinning and Weaving Mills2004 (174) ELT 42 (Raj HC DB), it was held that merely providing an alternative method or additional method for availing Cenvat Credit does not take away the entitlement to avail Cenvat credit on the basis of original endorsed document - quoted and followed inDarshan Industriesv.UOI(2014) 307 ELT 36 (Guj HC DB). Though the decision was in different context, the principle is fully applicable here.

Sir,

We are Supplier. Till march 2015 end we take the material from the importer who is registered in excise. They prepare excise bill as buyer and Consingee,So our end user receives my vendors direct excide gate pass and our's commercial invoice.Our client use to claim for the MODVAT,not US.

But we heard that there is change in rule from March 01,2015 that from now onwards buyer consingee will not be considered. In excise gatepass buyer and consingee must be same.(previously it was different).

what should we do? Do we have to register in excise? or should we continue doing the same?

[Anuj Swarup]

Sir,

Regarding the amendment in rule11 of CER, ,kindly let me know sir, whether the consignee can take the cenvat on the invoice of manufacturer if the buyer is shown in invoice of manufacturer is not registered in central excise and consignee is registered with central excise ?????? Sir, kindly clarify us.

[RAMNIRANJAN KANDOI]

Pl. read the proviso carefully, change is only for REGISTERED DEALER, and there is no change if Buyer/Agent is shown under BUYER column.End consumer(Manufacturer) can get credit on the basis of Excise Invoice issued under Rule 11 of CER,2002. This is as per Rule 9(1) of CCR,2004.Taking credit is governed by CCR,2004 and not by CER,2002.

I fully agree with Mr.V. S. Datey reply to the querry.

Same opinion is given by 2 other Advocates.

As there are lot of queries by many affected assesses, it is high time for CBEC to issue proper clarification so all can get relief.

AI Summary

Cenvat credit on dealer invoices may be allowed when registered dealers instruct direct delivery, but clarification is needed.
The amendment permits a registered dealer to have goods delivered directly to the ultimate recipient with the dealer shown as buyer, and allows cenvat credit on the basis of the dealer's invoice; a manufacturer's invoice naming the consignee has previously been accepted for credit. Conflicting views have arisen on whether unregistered dealers must now register to enable recipients to claim credit, and commentators urge CBEC clarification to resolve the uncertainty and avoid litigation.