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Documents Required for availing Cenvat Credit - Cenvat Credit - Ready Reckoner - Cenvat Credit

Documents Required for availing Cenvat Credit
  • Contents

Chapter 12

Documents for Required for Availing Cenvat Credit

Statutory Provisions:

Rule 9(1), 9(2) and 9(3) of the Cenvat Credit Rules, 2004

Documents and accounts.-

Rule 9(1) The CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely :-

(a) an invoice issued by-

(i) a manufacturer for clearance of -

(I) inputs or capital goods from his factory or depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer;

(II) inputs or capital goods as such;

(ii) an importer;

(iii) an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002;

(iv) a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or

(b) a supplementary invoice, issued by a manufacturer or importer of inputs or capital goods in terms of the provisions of Central Excise Rules, 2002 from his factory or depot or from the premises of the consignment agent of the said manufacturer or importer or from any other premises from where the goods are sold by, or on behalf of, the said manufacturer or importer, in case additional amount of excise duties or additional duty leviable under section 3 of the Customs Tariff Act, has been paid, except where the additional amount of duty became recoverable from the manufacturer or importer of inputs or capital goods on account of any non-levy or short-levy by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, or of the Customs Act, 1962 (52 of 1962) or the rules made there under with intent to evade payment of duty.

Explanation.- For removal of doubts, it is clarified that supplementary invoice shall also include challan or any other similar document evidencing payment of additional amount of additional duty leviable under section 3 of the Customs Tariff Act; or

(bb) a supplementary invoice, bill or challan issued by a provider of output service, in terms of the provisions of Service Tax Rules, 1994 except where the additional amount of tax became recoverable from the provider of service on account of non-levy or non-payment or short-levy or short-payment by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Finance Act or of the rules made thereunder with the intent to evade payment of service tax.(c) a bill of entry; or

(d) a certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or

(e) a challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax;  or

(f) an invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004; or

(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or

(g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994.

Provided that the credit of additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) shall not be allowed if the invoice or the supplementary invoice, as the case may be, bears an indication to the effect that no credit of the said additional duty shall be admissible;

 

Rule 9 (2)

  No CENVAT credit under sub-rule(1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document: 

     Provided that if  the  said  document does not contain all the particulars  but contains the details of duty or service tax payable, description of the goods or taxable service, assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be], name and address of the factory or warehouse or premises of first or second stage dealers or provider ofoutput service, and the Deputy Commissioner of  Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and  accounted for in the books of the account of the receiver, he may allow the CENVAT credit;

Rule 9(3) 

[note: - Provisions of reasonable steps has been removed with effect from 1-3-2007]

 

================================

 

The following documents are valid for availing Cenvat Credit:

A.     For availing Cenvat Credit on Input and Capital Goods

· Invoice of the manufacturer issued for removal of finished goods.

·  Invoice of the depot or consignment agent or any other premises of the manufacturer from where the finished goods are sold by or on behalf of the said manufacturer.

·  Invoice of the manufacturer for inputs or capital goods as such.

·  Invoice issued by an importer

·  Invoice of the depot or consignment agent or any other premises of the importer from where the goods are sold by or on behalf of the said importer.

·  Invoice issued by an importer from his depot or from the premises of the consignment agent of the said importer if the said depot or the premises, as the case may be, is registered in terms of the provisions of Central Excise Rules, 2002;

·  Invoice issued by a first stage dealer or a second stage dealer, as the case may be, in terms of the provisions of Central Excise Rules, 2002; or

·  A certificate issued by an appraiser of customs in respect of goods imported through a Foreign Post Office; or

·  A supplementary invoice.

 

B.  For availing Cenvat Credit on Input Services

·  An invoice, a bill or challan issued by a provider of input service on or after the 10th day of, September, 2004;

- A supplementary invoice

 

C.  For availing Cenvat Credit as Distributed by Input Service Distributor

·   An invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994.

 

D.    For availing Cenvat Credit on the input services on which service tax paid as receiver of such services

·  A challan evidencing payment of service tax by the person liable to pay service tax

  An input service shall be eligible for Cenvat Credit on the basis of self-generated challan or any other document evidencing payment of service tax.

  Further, in relation to business auxiliary service of distribution of mutual fund by a mutual fund distributor or an agent, as the case be, the mutual fund or asset management company, as the case may be, receiving such service is liable to pay service tax. 2(1)(d)(vi). But, this clause not present in the Rule 9 of the Cenvat Credit Rules, 2004, means thereby no Cenvat Credit is available in case of distribution of mutual fund.

 

Discrepancy in the documents - Rule 9(2)

Invoice / bills / challan or any other documents which is issued for the purpose of payment of excise duty or service tax are issued in accordance with the rules prescribed for that purpose. Under Central Excise, Rule 11 of the Central Excise Rules, 2002 prescribes the manner and contents of the Invoice to be issued by the manufacturer at the time of removal goods from his factory premises. Under Service Tax, Rule 4A and 4B prescribed the manner and contents of the invoice / bill / challan / consignment note etc.

Some time at the time of issue of such duty paying document the manufacture or provider of services fails to mention all the particulars required by the respective rules, and therefore the receiver of such inputs / input services or capital goods may suffer and loose the Cenvat Credit.

To protect the interest of the receiver of the input / capital goods or input services rule 9(2) prescribes that: -

AC / DC of Central Excise has been empowered to condone such discrepancy and allow Cenvat Credit if the following minimum particulars are mentioned on the document:

The details of duty or service tax payable,

 Description of the goods or taxable service,

assessable value,

Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be,

 name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service.

AC / DC must be satisfied that the goods or services covered by the said document have been received and  accounted for in the books of the account of the receiver, he may allow the CENVAT credit.

Does, it mean that for every  defect, the assessee should approach the AC / DC. In the opinion of the Author / Editor, it is not required.  There are number of judgments and decisions in which the honourable tribunal has held that Cenvat Credit shall not be denied merely because of minor defects in the Invoice.

 

Reasonable Steps to be taken before availing Cenvat Credit - Rule 9(3)

Provisions of reasonable steps has been removed with effect from 1-3-2007)

 

==========================================

 Some interesting and important issues:

1 Invoice issued in the name of Head Office but material received at factory

Some times, it may happen that invoice has been issued in the name of head office but the material has been received by the factory, in such cases Cenvat should not be denied merely because the invoice is not in the name of the actual user.

 

2 Endorsement on the Invoice or Bill of Entry is not valid.

Earlier, under the old provisions of Modvat Credit, credit was allowed on the basis of endorsed duty paying documents. But, in the present scenario it is not possible. There are various specific provision has been inserted so that the benefit of Cenvat Credit shall not be lost i.e. Importer is allowed to issue invoice, first stage / second stage dealer concept is there, manufacturer is allowed to remove input / capital goods on duty paying document. Therefore, since there are various options available, instead of endorsing invoice, one must issue in Invoice or other duty paying document as the case may be.

Even bill of entry is not endorsable. The importer is required to obtain the registration and pass the incidence of duty by issuing his own invoice.

 

3 Self invoice in case of material returned or rejected

Some times, a manufacturer who has issued in Invoice and cleared material on such invoice, receives material back in his factory for repair, remaking or reconditioning, in that situation he shall be allowed to take the credit of duty paid on such material on the basis of the invoice issued by himself earlier. There no restriction that he can not avail the Cenvat Credit on his own invoice.

 

4 Cenvat Credit can be taken on any copy

Earlier, under the erstwhile provision of Modvat / Cenvat Credit, it was specifically mentioned that the Credit shall be taken only on the basis on Duplicate Copy (Transporter Copy) of the Invoice. However, various courts and tribunal has given the verdict that it is possible to avail the Cenvat credit on the basis of First Copy (Original Copy for the buyer) shall be allowed.

 However, at present there is no such specific condition and Cenvat Credit can be availed on any copy of invoice, it is highly advisable that Cenvat Credit may be availed on the basis of Duplicate Copy (Transporter Copy). The reason behind this view is that the Duplicate copy is the best proof that he material has been received in the premises of the procurer.

On the contrary, if the receiver wishes to avail the Cenvat Credit on the basis of the Original Copy of the Invoice, certainly he can do so, but it is highly advisable that he must avail the Cenvat Credit only on original copy except certain exceptional circumstances like original copy has been lost.

 

5  Cenvat Credit on Supplementary Invoice:

Cenvat Credit can be availed on the basis of Supplementary Invoice Issued by the Manufacturer or Importer or Service Provider..

There are various reasons in which supplementary invoice can be issued: -

-   Provisional Assessment

-    Cost escalation clause

-    Additional CVD paid on Import of Goods.

-    Demand raised by the Excise / custom department

However, if such demand / additional duty is paid on account of fraud, collusion, willful mis-statement or suppression of fats or in contravention of any provision of the Act or rule with intention to evade duty, shall not be available as Cenvat Credit.

 
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