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Utilization of CESS Whether industry has been fooled?

Central Excise - By: - Manoj Agarwal - Dated:- 4-5-2015 - In a significant move towards Goods and Service Tax (GST), the Central Government had issued Notification No. 14/2015-CE and 15/2015-CE dated 01-03-2015 (as part of the Union Budget - 2015 Notifications) whereby it exempted all goods falling under First Schedule of the Central Excise Tariff Act, 1985 (CETA) from the levy of Education Cess and Secondary and Higher Education Cess (SHE Cess) (collectively referred as CESS) respectively with .....

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be unintended fall out of the above notification was that the balance of cenvat credit lying in Ed. Cess and SHE Cess as on 28-02-2015 became un-utilizable and deadstock for all the manufacturers!! This is due to the restriction contained in Rule 3(7)(b) of the Cenvat Credit Rules, 2004 (hereinafter referred as CCR) which provide that cenvat credit availed on Ed. Cess/SHE Cess can be utilized only towards payment of Ed. Cess/SHE Cess respectively. The issue was raised by various members and asso .....

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in rule 3, in sub-rule (7), in clause (b), after the second proviso, the following shall be substituted, namely:- Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the factory of manufacture of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise leviable under the First Schedule to the Excise Tariff Act: Provided also that the credit of balance fifty per cent Educa .....

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y of excise specified in the First Schedule to the Excise Tariff Act. . At the first glance, it appears that the Central Government has resolved all the issues raised by the industry. But in effect, this is not TRUE. The relief sought by the industry has ACTUALLY NOT been given to them. This notification is just an eye wash!! If I may be permitted, I would like to go a step further to say that the industry has been fooled by the government. The above notification does allow the manufacturers to .....

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n simple words, the industry was expecting to utilize the balance of CESS lying as on 28-02-2015 towards payment of excise duty, which is not yet possible even after the amendment of Rule 3(7)(b) of CCR. Further, the same difficulty will also be faced by the output service providers after the withdrawal of CESS on service tax from the date to be notified. I fail to understand why a clarificatory amendment can t be made without adding more confusion and problems. No real benefit has been extended .....

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