“Acche din aa gaye hai” – CBEC issue Circular No.: 990/14/2014-CX-8 dated: 19.11.2014, clarifying CENVAT credit can be re-availed later, provided once Cenvat Credit is taken within 6 months and reversed due to some reason.

[Anish Goyal]

At the time of Budget,2014, Rule 4(1) and Rule 4(7) CENVAT Credit Rules, 2004 was amended vide No. 21/2014-CE (NT) dated 11.07.2014. The amended rules prescribed that manufacturer or output service provider shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of Rule 9.

This created lots of problems to service providers and manufacturers. They were not able to make payment for input services within 6 months from the date of invoice. Thus, they were worried about the availability of CENVAT Credit on input services. Now, CBEC has issued a Circular No.: 990/14/2014-CX-8 dated: 19.11.2014, clarifying CENVAT credit can be re-availed even after 6 months, provided within 6 months they once takes CENVAT Credit of input services on the basis of invoice.

In the Circular it is stated that, “The purpose of the amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 is to ensure that after the issue of a document under sub-rule (1) of Rule 9, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B) or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules.”

As per the said circular following situation may emerge where CENVAT credit has to be taken again:

• 3^rd proviso to Rule 4(7) of CCR, 2004 prescribes that if the payment of value of input service and service tax payable is not made within three months of date of invoice, bill or challan, then the CENVAT Credit availed is required to be paid back by the manufacturer or service provider. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back can be re-credited.
• According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to use on which CENVAT Credit has been taken, is written off or such provisions made in Books of Account, the manufacturer or service provider is required to pay an amount equal to credit so taken. However, when the inputs or capital goods are subsequently used, the amount so paid can be re-credited in the account.
• Rule 4(5)(a) of CCR, 2004 prescribes that in case inputs sent to job worker are not received back within 180 days, the manufacturer or service provider is required to pay an amount equal to credit taken on such inputs in the first instance. However, when the inputs are subsequently received back from job worker, the amount so paid can be re-credited in the account.

As per my view the above situations are illustrative in the Circular. Due to some other reasons also if CENVAT credit is availed within 6 months is reversed, re-credit can be taken provided it is within the provisions of other CENVAT credit Rules, 2004 as it is specifically stated in the Circular that amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 would not apply for taking re-credit of amount reversed.