CENVAT Credit rules 2004 amended to remove anomalies

By TIOL News Service

NEW DELHI, FEB 26, 2010: FINALLY , Rule 15 of the CENVAT Credit rules has been amended to remove the anomaly. The existing sub-rules in rule 15 are not uniform for manufacturers and output service providers. This has been highlighted by the Budget Run-up stories in TIOL every year . Now, rule 15 has been amended to bring uniformity in penal provisions. Rule 15 now reads:

“15. Confiscation and penalty.- (1) If any person, takes or utilises CENVAT credit in respect of input or capital goods or input services, wrongly or in contravention of any of the provisions of these rules, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty or service tax on such goods or services, as the case may be, or two thousand rupees, whichever is greater.

(2) In a case, where the CENVAT credit in respect of input or capital goods or input services hasbeen taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Excise Act.

(3) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made thereunder with intent to evade payment of service tax, then, the output also liable pay 78 of the Finance Act.

The other amendments include:

++ Amendment of Rule 6 to include the exempted goods imported and supplied to a power project from which power supply has been tied up through tariff based competitive bidding; or to a power project awarded to a developer through tariff based competitive bidding.

++ Amendment of Rule 4(5) to allow credit on jigs fixtures moulds and dies sent by the manufacturer to another manufacturer for production of goods

++ Amendment of Rule 4(2) to allow 100% Credit on capital goods in the same financial year for small scale units

++ Amendment to Rule 3(5) to allow accelerated depreciation to computers cleared by the assessees on which credit has been availed