Budget 2007 - Central Excise - Proposed changed in Cenvat Credit Rules, 2004 "

The CENVAT Credit Rules, 2004 have been amended as under (with immediate Effect i.e. with effect from 1-3-2007):     

1 Necessary amendments have been made in the Cenvat Credit Rules, 2004 to allow credit of Secondary and Higher Education Cess paid on inputs and capital goods, which can be utilized for payment of Education cesses only.  

2  Sub-rule (2) of rule 9 has been amended to provide that the CENVAT credit can be taken if all the particulars as prescribed under the rules are available on the invoice or other duty-paying document.   Further, in case any of the required particulars (other than specified particulars) are not available on the document, the  Assistant/Deputy  Commissioner  may  allow  the  credit  subject  to  his satisfaction that (i) goods/services covered by said document has been received by the asseessee, and (ii) the receipt of said goods/services has been accounted for in the books of accounts of the receiver.   Consequential amendments have also been made in rule 15(1) and 15(3), which provides for penal action.   Subrule (3) of rule 9 has been deleted;  

3 Sub-rule (11) has been inserted in rule 9 so as to allow an assessee to rectify mistakes and file revised return within 60 days from the date of filing of original return, subject to specified conditions;  

4 New sub-rules (3) & (4) have been inserted in rule 11 to provide that when a person  opts  for  exemption  from  whole  of  duty (in  case  of  conditional notification) or where a product becomes exempted absolutely, in such cases, the CENVAT credit taken on inputs lying in stock, or in process or contained in the final product lying in stock should be reversed. Similar provision has been made in respect of cases wherein taxable service becomes exempted.   However, no reversal of credit of input services is required to be made in such cases.

Cenvat credit rules updated to allow education cess credit, tighten documentation, permit limited return rectification and require credit reversal. Amendments to the CENVAT Credit Rules, 2004 permit credit of Secondary and Higher Education Cess on inputs and capital goods usable only for education cesses; require prescribed invoice particulars for credit with supervisory discretion to allow credit when certain particulars are missing but goods/services are received and accounted for; allow assessees to rectify returns within a limited period; and mandate reversal of credit for inputs and goods where a product or service becomes exempt or the assessee opts for full conditional exemption, while excluding reversal of input service credit in those cases.