Exemption under Notification No 01/2011

[NEERAJ KUMAR, RANCHI]

Dear Sirs,

Any person availing exemption under Notification No. 01/2011-CE i.e. paying duty at 1%, can he shift to Notification No. 02/2011-CE i.e. paying duty @ 5% and availing cenvat credit in the middle of the year, if at the begining he has opted for earlier notification.

[sv bhasker]

Dear Mr Niraj

One of the conditions to avail Notification No.1/2011-CE is not to avail Cenvat Credit.  It appears that If he violates the condition and takes Cenvat credit, he is not entiltled to the said Notification and applicable duty needs to paid after avaling benefit availble under any Notification,which includes 2/2011-CE  So in absence of any restrctions imposed regarding opting  to either 1/2011 or 2/2011-CE, it appears that he can shift in the middle of the year to 2/2011-CE

[Alok Kumar]

Dear Mr. Niraj,

yes , completely agree with the view of our learned brother Mr. S.V . Bhaskar on the issue going by the language and wordings used in f the relevant notifications.

thanks,

 

alok kumar

[DEV KUMAR KOTHARI]

Please check updated notifications and ensure that the items are covered under both notification.

As rightly answered, by Mr. Bhaskar and Alok, you can have option.

For availeing 1% scheme condition is that CENVAT should not be availed.

Under 5% scheme CENVAT can be availed.

Therefore, it will be advisable to maintain earmaked records to satisfy authorities as to eligibility under twonotification.

Condition for 1% duty is:

Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or tax on input services has been taken under the provisions of the CENVAT Credit Rules, 2004.

This must be  fully satisfied without any scope of doubt..

AI Summary

Cenvat credit restriction: opting out of no-credit exemption allows shift to higher-rate scheme and claim of credit. The lower-rate exemption expressly excludes goods for which CENVAT credit on inputs or input services has been taken; if a person takes CENVAT credit while claiming that exemption, they are not entitled to it and must pay duty applicable after disallowance. There is no explicit restriction preventing a taxpayer who has not availed credit from shifting to the credit-permitting scheme during the year, but taxpayers should verify item coverage under both notifications and maintain earmarked records to demonstrate eligibility.