Cenvat Credit on Credit Note.

[SHIVKUMAR SHARMA]

Dear Experts

Some of our Customers have make payments before due date & v have given them 5% discount for last 10 month supply & issued credit note to them for basic +Excise+VAT in September2015.

Pls.confirm whether v can take cenvat credit of Excise duty on the basis of Credit note issued by us to the customers.

Thanks in advance

SHIVKUMAR SHARMA

[YAGAY andSUN]

CENVAT credit on the basis of issuance of Credit Note/Debit Note may be allowed if all the contents are mentioned as per the Rule 11 of CER or as per the Rule 4A of the Service Tax Rules. However, it is better to issue an Supplementary Invoice in this regard to avoid any unwarranted situations which may arise in near future.

[Rajagopalan Ranganathan]

Sir,

Rule 9 of Cenvat Credit Rules, 2004 stipulates that-

(1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :-

(a) an invoice issued by-

(i) a manufacturer for clearance of -

(I) inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer;

(II) inputs or capital goods as such;

(ii) an importer;

(iii) an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002;]

(iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or

(b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made there under with intent to evade payment of duty.

Explanation.- For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under section 3 of the Customs Tariff Act; or

(bb) a supplementary invoice, bill or challan issued by a provider of output service, in terms of the provisions of Service Tax Rules, 1994 except where the additional amount of tax became recoverable from the provider of service on account of non-levy or non-payment or short-levy or short-payment by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Finance Act or of the rules made thereunder with the intent to evade payment of service tax.

(c) a bill of entry; or

(d) a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or

(e) a challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax; or

(f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004; or

(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or

(g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994.

Provided that the credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) shall not be allowed if the invoice or the supplementary invoice, as the case may be, bears an indication to the effect that no credit of the said additional duty shall be admissible;

(2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document.

Credit note is not one of the documents prescribed under rule 9. Therefore it is safe to avoid taking credit on tha basis of credit note. Otherwise you have to waste you time and energy in unnecessary litigation.

[KASTURI SETHI]

In this context, I would like to refer to Board's circular No.122/3/2010-ST dated 30.3.2010. Though it pertains to Service Tax, it can be made applicable to Central Excise, it being same analogy.

[SURESH ASTEKAR]

From your query it is clear that you have paid Excise Duty on the price initially charged to your customers and on account of their early payments you have given them discount of 5%. Your customers would most probably have already availed Cenvat credit of the entire Central Excise duty paid by you. Your action of giving discount much after the clearance of the goods may at best amount to reduction of price and which may result in you having paid excess excise duty. You may make a claim for refund of the excess central excise duty paid but it will have the consequences of your customers simultaneously reversing the cenvat credit to that extent and also payment of interest thereon etc. As it is the Department may issue notices to your customers seeking reversal of the cenvat credit to the extent of the Excise duty that you have indicated in the credit notes issued to your customers. In any case you cannot take cenvat credit of the excise duty indicated in the credit notes issued by you to your customers since it is not the duty paid by you on your inputs.

[Mahir S]

Sir,

An assessee cannot take cenvat credit based on the credit note issued by himself.

[SHIVKUMAR SHARMA]

Dear Suresh Astekar

Our Customers are of Textile Processors & they are not taking Cenvat credit on their inputs as their final product is not Excisable.

Shivkumar sharma

[SHIVKUMAR SHARMA]

Dear Mr Mahir S

I am so thankful to you if you can give any reference for non availability of cenvat credit on our own Credit note.

ShivKumar sharma

[SURESH ASTEKAR]

Dear Shivkumar Sharma,

If your customers are not taking cenvat credit, you may claim the refund of the duty amount paid back to your customers by way of credit note, within one year as per Section 11B of the Central Excise Act. There are several decisions on this point, some of which are as under:

2015 (320) E.L.T. 756 (A.P.) = 2015 (9) TMI 877 - ANDHRA PRADESH HIGH COURT

IN THE HIGH COURT OF JUDICATURE FOR ANDHRA PRADESH AT HYDERABAD

L. Narasimha Reddy and Challa Kodanda Ram, JJ.

HYDERABAD CHEMICAL SUPPLIES LTD.

Versus

C.C.E. & C., HYDERABAD-IV

C.E.A. No. 21 of 2004, decided on 26-11-2014

Refund - Unjust enrichment - Differential amount arising on account of trade discounts given to wholesaler - HELD : Facts in S. Kumar Ltd. [2002 (143) E.L.T. 641 (Tribunal) = 2002 (4) TMI 343 - CEGAT, NEW DELHI] substantially different - Trade discounts paid at prescribed point of sale, namely, at stage of removal of goods from place of manufacture and depot - Deputy Commissioner order holding discounts in accordance with law, final - Particulars furnished under Rules 173C and 173G of Central Excise Rules, 1944 contains names of persons extended with trade discounts - Also trade discounts in form of credit note, therefore, corresponding burden not passed on to end-customer - Court decision in A.P Paper Mills Limited followed - Section 11 of Central Excise Act, 1944. [paras 6, 7, 8, 9, 10, 11, 12]

 

2015 (319) E.L.T. 347 (Tri. - Del.) = 2015 (9) TMI 460 - CESTAT NEW DELHI

IN THE CESTAT, PRINCIPAL BENCH, NEW DELHI

Ms. Archana Wadhwa, Member (J) and Shri R.K. Singh, Member (T)

COMMISSIONER OF C. EX., GHAZIABAD

Versus

BHUSHAN STEEL LTD.

Final Order Nos. A/53453-53455/2014-EX(DB), dated 21-8-2014 in Appeal Nos. E/55371, 56109 & 57280/2013-EX(DB)

Refund - Eligibility - Trade discounts given to customers, quantified subsequent to removal of goods - Whether deductible from assessable value - HELD : As Tribunal in remand proceedings has held said trade discounts admissible, not open to Revenue to challenge the same - Discount policy known to customers at time of clearance of goods as proved by certificates given by customers and records showing discounts actually given to customers on attaining particular goal of quantum of purchase - Said customers certificate, though given subsequently, relate to relevant period - Non-uploading of discount policy on website not relevant as discount policy floated amongst customers by assessee - As discount deductions from assessable value admissible, assessee eligible for refund subject to provisions of Section 11B of Central Excise Act 1944 - Matter already remanded to adjudicating authority for verification of evidence in this regard - Section 35C of Central Excise Act, 1944. [paras 3,

 

 

2014 (307) E.L.T. 761 (Tri. - Mumbai) = 2014 (8) TMI 535 - CESTAT MUMBAI

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

[COURT NO. II]

Shri Ashok Jindal, Member (J)

TATA MOTORS LTD.

Versus

COMMISSIONER OF CENTRAL EXCISE, PUNE-I

Final Order Nos. A/896-905/2014-WZB/C-IV(SMB), dated 22-4-2014 in Appeal Nos. E/1531-1540/2007-Mum

Refund - Unjust enrichment - Discount given to customers on clearance of old stocks/prompt payment of vehicles vide issuance of credit notes and refund claimed of duty component of said discounts - Following decision of High Court of Madras in case of Addison & Co. - [2001 (129) E.L.T. 44 (Mad.)= 2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS] as entitlement of discount already known to buyers prior to clearance of vehicles, bar of unjust enrichment not applicable - Assessee showing amount attributable to refund claims as receivables in balance sheet and confirmation received from dealers of receiving credit of discount through credit notes - Assessee entitled to claim refund - Impugned order set aside - Section 11B of Central Excise Act, 1944. [para 6]

Appeals allowed

 

2014 (307) E.L.T. 182 (Tri. - Mumbai) = 2014 (12) TMI 158 - CESTAT MUMBAI

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

[COURT NO. II]

Shri Anil Choudhary, Member (J)

DAIMLER CHRYSLER INDIA PVT. LTD.

Versus

COMMISSIONER OF C. EX., PUNE-I

Final Order No. A/906/2014-WZB/C-IV(SMB), dated 25-4-2014 in Appeal No. E/1556/2007-Mum

Refund - Denial of - Unjust enrichment - Incentive discount and consequent duty relief given to dealers/agents, by way of credit notes issued subsequent to clearance of vehicles by manufacturer, not passed on to ultimate consumer - HELD : Following ratio of decision in case of Addison & Co. [2001 (129) E.L.T. 44 (Mad.) = 2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS], duty levied on manufacturer determined with reference to price at which manufacturer sells goods to buyer/dealer and not on price at which dealer, in turn, sells it to sub-dealer, retailer or ultimate consumer - Manufacturer eligible to get refund of said duty paid under clause (d) of proviso to Section 11B(2) of Central Excise Act, 1944 - Refund of excise duty allowed - Section 11B(2) ibid. [para 7]

Appeal allowed

 

2014 (306) E.L.T. 344 (A.P.) = 2014 (3) TMI 671 - ANDHRA PRADESH HIGH COURT

IN THE HIGH COURT OF JUDICATURE FOR ANDHRA PRADESH AT HYDERABAD

G. Chandraiah and Challa Kodanda Ram, JJ.

A.P. PAPER MILLS LTD.

Versus

COMMR. OF C. EX., VISAKHAPATNAM

C.E.A. Nos. 51 of 2004 and 9, 10 & 21 of 2005, decided on 19-2-2014

Refund when discount allowed to dealers by manufacturer-assessee resulting in revision of invoices - Refund of excess amount of Central Excise duty paid sought - Denial of, on ground that assessee failed to produce evidence that burden of duty had not been passed on the ultimate consumer by the dealer - Ground rejected - When the primary as well as appellate authorities had recorded that assessee had made over the Excise duty component, which was collected originally on revision of the invoice price, in the process of allowing discounts, same had to be accepted by the Tribunal - Moreover, as per Addison and Co. [2001 (129) E.L.T. 44 (Mad.) = 2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS], manufacturer is not liable to produce evidence as to who the ultimate consumer was and whether such consumer had borne the burden of duty - Thus, assessee entitled to refund of duty on account of discounts allowed to the dealers subsequent to the time of removal of the goods - Sections 11B(2) and 35G of Central Excise Act, 1944. [paras 10, 16, 17]

Appeals allowed

 

2011 (272) E.L.T. 385 (Tri. - Mumbai) = 2011 (5) TMI 775 - CESTAT, MUMBAI

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

[COURT NO. II]

S/Shri Rakesh Kumar, Member (T) and Ashok Jindal, Member (J)

GLENMARK PHARMACEUTICALS LTD.

Versus

COMMISSIONER OF C. EX., NASIK

Final Order No. A/425/2011-WZB/C-II/(EB), dated 11-5-2011 in Appeal No. E/6159/2004-Mum

Valuation (Central Excise) - Trade discount - Quantity discount given in the form of free quantities - Duty paid on full quantities without taking into account the quantity discount claimed by way of refund - Refund claimed rejected as quantity discount not mentioned in the invoice - Issue of invoices at the time of clearances not necessary when quantity discount given at the time of sales from depot - Turnover discount permissible even if quantities are quantified on half-yearly basis - Duty on free quantities paid as per depot invoices - Rejection of refund claim set aside and case remanded for de novo application in accordance with Supreme Court decision in Madras Rubber Factory [1995 (77 E.L.T. 433 (S.C.) = 1995 (5) TMI 28 - SUPREME COURT OF INDIA]. [para 7]

Appeal disposed off

 

[Mahir S]

Mr Sharma,

I hope the matter is now clear based on above case laws.

Pls tell if any further clarification is required in the matter.

AI Summary

CENVAT Credit Ineligible on Discount Credit Notes Under Rule 9; Use Supplementary Invoice or Claim Refund via Section 11B. A discussion on a forum addressed whether CENVAT credit can be claimed on excise duty based on a credit note issued for discounts given to customers. The general consensus among the participants was that CENVAT credit cannot be claimed on credit notes as they are not recognized documents for claiming such credit under Rule 9 of the CENVAT Credit Rules, 2004. It was suggested that a supplementary invoice should be issued instead to avoid complications. Additionally, if customers are not availing CENVAT credit, a refund for the excess duty paid can be claimed under Section 11B of the Central Excise Act.