CENVAT Credit on CVD - Imports

[Ganeshan Kalyani]

Dear Experts,

With reference to Notification No. 1/2016-Central Excise (N.T.) dated 01.02.2016, the CENVAT Credit on CVD - Counter vailing duty has been omitted, retrospectively with effect from 1st of March, 2015. I wanted to discuss why this amendment has been made retrospectively while any other tax amendment has been proposed prospectively, Even respected Modi Government talked about prospective change. What will be the impact on those assesses who has taken set-off on CVD. Clarification is expected in this regard. Dear Experts please share your views in this regard.

[KASTURI SETHI]

Dear Sh.Ganeshan Kalyani Ji,

Sir, What I understand CENVAT Credit on CVD has not been disallowed by way of Notification No.1/2016-CE(NT) dated 1.2.16. as only proviso to clause vii has been omitted retrospectively. This proviso was inserted vide Notification No.3/11-CE(NT) dated 1.3.11 effective from 1.3.11. By this notification restriction of availing not more than 85% of Additional Duty of Customs on ships, boats etc-----------was imposed. This proviso stands omitted means restriction has been withdrawn. Now full credit of Additional Duty Customs paid on ships, boats etc. can be taken. This is in favour of assessee. Pl. go through the relevant extract of notification given below:

"(2) They shall come into force with effect from the 1st day of March, 2015.

2. In the CENVAT Credit Rules, 2004, in rule 3, in sub-rule (1), in clause (vii), the proviso shall be omitted;"

By implementing this notification retrospectively from 1.3.15, the Govt. has restored the benefit (say substantive right) which was snatched.

Do you agree ? I would like to know your further observations.

With regards,

K.L.SETHI

 

[   (2) They shall come into force with effect from the 1st day of March, 2015. 2. In the CENVAT Credit Rules, 2004, in rule 3, in sub-rule (1), in clause (vii), the proviso shall be omitted;

[CSSANJAY MALHOTRA]

Dear Mr. Ganeshan ji,

What has been taken out in Notification No. 01/2016-CE(N.T.) dated 01.02.16 is "Availment of CENVAT Credit in excess of 85% of Custom Duty paid on Ships, boats and other floating structures" falling under Ch 89080000 and not the CVD........ which stands as is..... (Deletion is the second part and not the primary one)....

Hope above addresses your query........

[MUKUND THAKKAR]

Thanks Sirs, for updating in micro level...both of you.

[Suryanarayana Sathineni]

Dear Friend,

The views expressed by Mr. Kasturi Sethi ji need no intervention since the said retrospective amendment is aimed to give benefit to the industry who was deprived of the said benefit .

Regards

Suryanarayana

[Ganeshan Kalyani]

Thanks for clarification Sri Kasturi Sir, Sri Sanjay Sir and Sri Surya Sir. Thanks.

[KASTURI SETHI]

The Govt. should have omitted the said proviso w.e.f. 1.3.11 i.e. the date of insertion instead of 1.3.15 in the interest of natural justice. Right was snatched w.e.f. 1.3.11 but has been restored w.e.f. 1.3.15.

AI Summary

Retrospective Amendment in Notification No. 1/2016-Central Excise Restores Full CENVAT Credit on CVD for Ships and Boats A discussion was initiated regarding the retrospective amendment in Notification No. 1/2016-Central Excise (N.T.), which omitted the provision limiting CENVAT Credit on the Countervailing Duty (CVD) for imports. The amendment, effective from March 1, 2015, allows full credit on additional customs duty for ships and boats, reversing a prior restriction. Participants debated the retrospective nature of this amendment, with some suggesting it should have been effective from March 1, 2011, when the restriction was first imposed. The consensus was that the amendment benefits the industry by restoring a previously removed right.