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.

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.