MARCH 14, 2012
Allow Full CENVAT Credit for Capital Goods
By Laxmikant P Munshi, Manager Excise & Sales Tax, Goodyear South Asia Tyres Pvt Ltd
A - CENTRAL EXCISE, SERVICE TAX AND VAT:-
1) It is suggested that the laws should be amended appropriately to allow Cenvat credit in respect of inputs to works contractors who have opted for the composition scheme i.e. in Central Excise, Service Tax and VAT Act.
2) The Principal Manufacturer should be eligible to use the Cenvat credit of Service Tax to off-set any Central Excise or Service Tax liability in respect of his own manufacture or services provided.
3) CENVAT Credit should also be allowed on the following documents:-
i) Reconstructed copy of the bill of entry if the Original, Triplicate copy is lost in transit or in any other manner which is beyond control of the assessee.
ii) Endorsed copy of the bill of entry.
Necessary amendment / Inclusion of above said documents in the scope of the Rule 9 of the CENVAT Credit Rules, 2004.
4) It is suggested that the time limit for return of inputs and capital goods removed to job-worker premises be done away with. Alternately, jurisdictional authority be delegated the necessary powers to extend the time limit of 180 days for return of inputs from job worker for reasons beyond the control of the manufacturer, like strike/lockout at the premises of the job worker. In respect of capital goods, the time limit be extended for the duration of the contract with the job-worker based on which such capital goods are sent out.
5) Inputs cleared ‘As Such' - Rule 3(5) of CENVAT Credit Rules, 2004 provides for payment of excise duty on inputs / capital-It is recommended that Central Excise statutes be amended to allow removal of inputs ‘as such' on payment of excise duty at the rate prevailing on the date of its removal and the value for purpose of duty determination be the total landed cost net of Cenvat + VAT of the inputs as on that date as per the records available with the assessee in their books of accounts.
6) It is suggested that the CENVAT Credit Rules, 2004 should be amended appropriately to enable credit of full CENVAT in respect of capital goods in the year of receipt in to the factory. This would be in line with the provisions on Cenvat credit in respect of inputs.
7) Rule 3(4) of the CENVAT Credit rule 2004 should be amended so as to enable an assessee to pay interest and penalty leviable under the Central Excise and Service tax laws through CENVAT credit available in their records.
8) It is suggested that the Central Excise Act, Vat Act, CST Act may be amended suitably to remove the requirement of pre-deposit of disputed duties, or, restrict it to not more than 5% of disputed taxes, only.
9) Further, all the Acts may be amended so that that appellate authorities are not drawn from the Department and it should have independent status like judicial authority.
10) The assessees are filing their monthly returns electronically, the jurisdictional range offices are insisting for submission of its hard copy on monthly basis. It is suggested that manual submission of returns may be dispensed with.
B - CENTRAL SALES TAX ACT:-
1) It is suggested that the Central Sales Tax Act be amended such that job-workers receiving materials through inter-State stock transfer from their Principals are permitted to issue Form F to the Principals. Guidelines on its computation of value and appearance in returns may be issued.
2) Guidelines for inclusion/ exclusions from “transfer otherwise than by way of sales” for facilitating the clearances of issues and receipts and providing of statutory forms may be issued.
C - Others
Payment made of Rubber Cess, R & D Cess by assessee or dealer may be allowed as CENVAT to cascade the cost impact.