Utilisation of cenvat Credit in payment of amount payable under Rule 6(3) of Cenvat Credit Rule, Central Excise

[onkar kumar]

Dear members

 

I want your view on the topic mentioned below

There is a provision to pay an amount 5% under Rule 6(3) of  Cenvat Credit Rule, 2004. Certainly it is not duty of excise but it is an obligation on the manufacturer/ service provider in a specific condition mentioned therein.

 

Now, Rule 3(4) of Cenvat Credit Rule specify the payments in which cenvat credit may be utilized. In this rule there is no where mentioned  for amount payable under Rule 6(3) but in explanation - II below Rule 6(3A) stipulates that this amount can be paid by utilizing Cenvat Credit. Thus, this explanation is in contrary to rule 3(4) of  Cenvat Credit Rule, 2004

 

Thank You

Posts / Replies

[Dilip Darji]

Dear Sir.

Rule 3 (4) of cenvat credit rule 2004, specifies the utilisation of CENVAT credit towards payment of certain duties mentioned therein. If it does not mention an amount payable under Rule 6 (3), then it cannot be utilised. You cannot read that Rule 6 (3), is not mentioned in Rule 3 (4), it can be utilsed. As per Rule 3(4) CENVAT credit can be utilised only for those duties which are mentioned thertein.

The provisions and explanation II to Rule 6 (3) (3A) and 3B are for indicating the period or the time by which payment to be made. However in explanation II it is mentioned "Unless specified otherwise".

 

[Bhaskar Sinha]

As you may be aware about provisions of Rule 6(3) of  CCR, 2004, that this rule is applicable to those units  manufacturing both dutiable as well exempted goods. Therefore one has to reverse 5% on value of exempted goods as obligation towards this option.

For more clarity kindly refer Circular No 870/8/2008-CX dated 16.05.2008, wherein is has been held that, 5% isnot an excise duty it just a reversal of cenvat credit.

regards

Bhaskar Sinha