Section
5B quietly sneaks into section 38 of CEA, 1944 – A delayed entry
though!
NEW DELHI, FEB 28, 2011: IN terms of Section 5B of the Central Excise Act, 1944, inserted w.e.f 11.05.2007 [Non-reversal of CENVAT credit] by the Finance Act, 2007, where an assessee has by availing Cenvat Credit on inputs/capital goods/input services paid excise duty on a final product under the belief that the same is excisable, but subsequently the process of making the said product, is held by the Court as not amounting to manufacture, in such cases, the Central Government may issue an order for non-reversal of such credit in past cases.
Since the insertion of the said section 5B only two notifications have seen the light of the day, namely –+ 22/2008-CE(N.T) dated 02.05.2008 - Cenvat credit reversal not required as metallization of films held as not manufacture by Supreme Court on 12-2-2004 in case of M/s. Metlex (I) Pvt. Ltd. v. Commissioner of C.Ex., New Delhi 2004-TIOL-77-SC-CX; + 28/2010-CE(N.T) dated 01.09.2010 - Cenvat credit taken upto 8-7-2004 on inputs, capital goods and input services used in making of wires from wire rods not to be reversed in view of SC decision in Collector of Central Excise v. Technoweld Industries 2003-TIOL-37-SC-CX. Incidentally, this section failed to get itself incorporated in section 38 of the CEA, 1944 which relates to “Publication of rules and notifications and laying of rules before Parliament”. So, the requisite amendment is being carried out in this Union Budget, 2011.Clause 67 of the Finance Bill, 2011 gets itself neatly tucked into the gamut of amendments and does the needful.It will be interesting to note that sections 3A and section 4A of the Central Excise Act, 1944 found mention in section 38 immediately after they were enacted on 14.05.1997 but their poor cousin viz. section 5B has taken almost four years.Hope this delayed entry does not cause any upheaval in the times to come.
As they say, it is better late than never!