CENVAT Credit on material directly sent for Job work, Central Excise

[Pradeep Jain]

Dear Sir,

We do send raw- material directly sent for job worker ( our extended manufacturing arm, where service tax is exempt), whether we are entitled for cenvat claim immediately on receipt of material at job workers end?

Regards

Pradeep Jain

Posts / Replies

[PAWAN KUMAR]

Dear Sir,

No, Cenvat credit will not be admissible on the goods on receipt at your job worker's premises.

In such case, when you will receive the processed goods supplied by your job worker into your factory premises, you can then take cenvat credit.

[Ramesh Patel]

Dear Pradip Jain

Mr. Pawan Kumar is right. Further in your case you need to receive back processed goods within 60 days instead of 180 days

[Naveed S]

Yes sir, inputs are required to be received in the factory premises for availing cenvat credit as explained above; except in respect of inputs used in the manufacture of final products, namely, articles of jewellery or other articles of precious metals falling under heading 7113 or 7114,

[JAI MISHRA]

Mr. Ramesh patel sir could you please explain,why the proceeds goods need to receive back with in 60 days? please provide the rules so that we can understand.

[PAWAN KUMAR]

Dear Sir,

No such provision is available in law for 60 days. what I understand, There is restriction that cenvat can be claimed within 180 days from the date of issue of invoice therefore the principal whose behalf the goods being sent to job worker should come back after processing within the limit of 180 days to enable availability of cenvat, otherwise cenvat would be lost.

[Ramesh Patel]

Dear Jai Mishra

This 60 days limits apply when you sent direct material from supplier to job worker and work under notification 214/86. Mfg can avail benefit after received processed material or intermediate goods as per Rule 3(1) from job worker.

180 days applicable in case of job work under 4(5) a.

[Rajagopalan Ranganathan]

Gentlemen,

Rule 4 (5) of CENVAT Credit Rules, 2004 states that-

"

(5) (a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service.

Therefore if the inputs or capital goods are not returned within 180 days the credit is not lost by the manufacturer/output service provider..

³[(b) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to,-

(i) another manufacturer for the production of goods; or

(ii) a job worker for the production of goods on his behalf, according to his specifications.

[PAWAN KUMAR]

Dear Sir,

Please go through with my first reply to the query, Cenvat credit will be admissible when the processed goods will received into your premises but ensure the returning should be prior to expiry of 180 days of issue of invoice of supplier. You have to take your first credit on that.

[SNEHAL SHAH]

Dear all,

Pl. refer below circular also .

Circular No.: 990/14/2014-CX-8

F. No. 267/72/2013-CX.8 (Pt)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

*************

New Delhi, the 19^th of November, 2014

To,

Principal Chief Commissioners/Chief Commissioners of Central Excise (All)

Principal Chief Commissioners/Chief Commissioners of Central Excise of Central Excise and Customs (All)

Director General, Directorate General of Central Excise Intelligence

Principal Commissioners/Commissioners of Central Excise (All)

Principal Commissioners/Commissioners of Central Excise and customs (All)

Web-master, CBEC

Madam/Sir,

Sub: Clarification regarding availment of CENVAT credit after six months-reg.

Attention is invited to the Notification of the Government of India in the Ministry of Finance, Department of Revenue No. 21/2014-CE (NT) dated 11.07.2014, vide which, inter alia, amendment was made in Rule 4(1) and 4(7) of CENVAT Credit Rules, 2004 (CCR, 2004) to prescribe 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.

2. Concerns have been expressed by trade that in view of above changes, the re-credit taken in following three situations may be hit by the time limit of six months prescribed:

1. 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.
2. 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.
3. 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.

3. The matter has been examined. 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

4. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board. Hindi version follows.

(Shankar Prasad Sarma)
OSD, CX.8

 

Thanks and Regards,

SNEHAL SHAH

[PAWAN KUMAR]

Dear Sir,

Circular quoted by Sh.Snehal Ji issued for clarification where re-credit of cenvat involve, however some text of para 3 of subject circular also focus on availability of cenvat within six months which is up to the principal on whose behalf the goods being directly supplied to job worker :

" 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."

Therefore please ensure taking of cenvat credit within six months which is possible when the goods returned timely.