Rule 6 of CCR, 2004 - procedure to be followed for availing procedure prescribed under rule 6(3A)

[sunil mehta]

Explanation I to Rule 6(3)(ii) OF CCR, 2004, says that "......If the mfg of goodsd or the provider of output service, avails any of the option under this rule ,. he shall excercise such option for all .............................,and such option shall not be withdrawn during the remaining part of the financial year. " Rule 6(3A) (a) mentions about giving 'intimation ' in writing to the Suptd. of C.Excise. Query:-1)Whether service provider availng option under Rule 6(3A) (a) of CCR, 2004, has to mandatorily give intimation every year to suptd.? 2)What happens if he has given in 1st. year but forgot to give intimation in 2nd. year?

Pay 10% of the value of the exempted goods or 8% of the value of the exempted services in terms of rule 6(3)(i). That's the thumb rule. A liberal view is that if it is considered as a technical flaw without causing any loss to the revenue, then pay penalty in case the adjudicating officer decides so, of course with the usual reversals as per rule 6(3A).

[sunil mehta]

In my query i had mentioned about rule 6(3)(ii_ and not rule 6(3)(i).Rule 6(3)(ii) speaks of reversal of proportionate cenvat credit and not paying 6% of exempted services. Expln.I gives direction to intimate stax dept. if any of the two options are opted by service provider. Whether by not intimating suptd. of stax about options under rule 6(3)(ii) attracts any penalty ? or whether suptd. may deny cenvat credit on the grounds that no intimation was given ? Pl. clarify

[ranganath shenoy]

pls submit it now ,with arequest for condonation of delay.Mention the fact in the ST-3 RETURN

AI Summary

Intimation requirement for electing input credit option may trigger reversal of CENVAT credit or penalties if omitted.
Rule 6 requires that when a taxpayer elects an option relating to exempted goods or services the choice must be applied for the whole financial year and, for certain options, written intimation to the Superintendent under Rule 6(3A)(a) is required. Omission to intimate may be remedied by belated submission with condonation and ST 3 disclosure, but can lead to proportionate reversal of CENVAT credit under Rule 6(3)(ii) and potential penalties or demands depending on adjudication and any assessed revenue loss.