Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
By
S.H.Sane & Co.
Chartered Accountants
CA Shekhar Sane
(B.Com, ACMA, FCA, DISA(ICAI)
Date :
3 rd October, 2015
INDEX
Sr.
No.
TOPIC
SLIDE
NUMBERS
Introduction
4-7
8-9
Definitions
10-26
Case Studies
27-30
Restrictions
Input goods/Services
32-35
36-39
40-41
42-46
47-58
10
31
INDEX
Sr.
No.
TOPIC
SLIDE
NUMBERS
11
Case Study
59-67
12
68-75
13
76-80
14
81-85
15
86-91
16
92-95
17
18
19
102-111
20
Case Studies
112-120
96-100
101
CA Shekhar
Sane
- 98230-91364 (shekharsane@vsnl.net
and shekhar@cashekharsane.com)
3
21
Summarized
Highlights of Cenvat
121-125
Introduction
Excise Duty and Service Tax are Central Government LeviesUnion List I
Both are destination based consumption tax, in which
incidence is passed on to ultimate consumer. (All India
Federation of Tax Practitioners Vs UOI (2007) 10 STT 166
SC)
They operate under Value Added Scheme (VAT) of taxation
wherein each person in transaction chain is taxed on the value
addition done by him and this concept is achieved by granting
credit of input tax or duties to manufacturer or service
provider through Cenvat Credit Scheme.
Cenvat Credit Scheme operates through Cenvat Credit Rules
2004. This scheme integrates indirect taxes viz. Excise Duty
and Service Tax.
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 4
Scheme / Rules
Assessee Entitlement
No Scheme
16th August
2002 to
14th May 2003
Service Tax
Credit Rules
2002
Service Tax
Credit Rules
2002
Cenvat Credit
Rules 2004
Main Part
Exclusions
Inclusions
Cars
and
vehicles
for
Facts
Discussion
Not Eligible
Eligible
Not Eligible
Not Eligible
19
A) Exempted goods means excisable goods which are exempt from the
whole of the duty of excise leviable thereon, and includes goods which are
chargeable to Nil rate of duty [and goods in respect of which the benefit of
an exemption under Notification No. 1/2011-CE, dated 1st March, 2011 or
under entries at serial numbers 67 and 128 of Notification No.12/2012-CE.,
dated 17th March, 2012 is availed]
B) Exempted service means a
1) taxable service which is exempt from the whole of the service tax
leviable thereon or
2) service, on which no service tax is leviable under section 66B of
the Finance Act; or
3) taxable service whose part of value is exempted on the condition that
no credit of inputs and input services, used for providing such taxable
service, shall be taken;
But shall not include a service which is exported in terms of rule 6A of the
Service Tax Rules,1994
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 20
Architect
Individual
Architect
Company
Remarks
Capital Goods eg. Air Conditioner, office
equipments, computers not allowed as
they are goods
CENVAT embedded in maintenance or AMC
Bills
Construction related credit not allowed.
( Original Works not allowed )
Maintenance Credit allowed.
ST paid under RCM(Individual /firm)
Original Works Not eligible
Repairs / renovation
Eligible
FOREX Dealers
Difference between sale and purchase
Composition scheme value. CENVAT Credit is eligible
Rule 2 B Valuation methodology
Lottery Dealers
Composition
scheme
Cosmetic Surgery
Clinic
( Separate
establishment )
Promoter,
developer,
No input credit is allowed in inputs but on
Builder
input services and capital goods.
Flat Sale
Composition Rate
VAT-1 % - price
ST 25 % Value @
14 % i.e. 3.50 %
Including land
CA Shekhar Sane - 98230-91364
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shekhar@cashekharsane.com)
Acquiring,
development and
selling freehold
plots
Mutual Fund
Companies
Insurance
Companies
A company engaged Input services for Commission credit allowed.
in marketing of
Construction related input services and capital
plots and earning
goods credit allowed.
commission. It is
also engaged in
construction of
bungalows for
customers referred
to it by the company
for whom they are
marketing.
CA Shekhar Sane - 98230-91364
(shekharsane@vsnl.net and
CA Shekhar Sane - 98230-91364
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shekhar@cashekharsane.com)
Input Goods
According to Rule 2(k) of CENVAT credit rules ( wef 1-4-2014)
input means
i. All goods used in the factory by the manufacturer of the final
product or
ii. Any goods including accessories, cleared along with final
product, the value of which is included in the value of final
product and goods used for providing free warranty for
final products or
iii. All goods used in generation of electricity or steam for
captive use or
iv. All goods used for providing any output service
But excludes
.
Light diesel oil, high speed diesel oil or motor spirit, commonly
known as petrol
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 32
Input Goods
any goods used for (a) construction or execution of works
contract of a building or a civil structure or a part thereof or
(b) laying of foundation or making of structures for support of
capital goods, except for provision of service portion in the
execution of a works contract or construction service as listed
under clause (b) of sec.66E of the Act
Capital goods except when used as parts or components in
manufacture of a final product
Motor Vehicles
Any goods such as food items, goods used in a guest house,
residential colony, club or recreation facility and clinical
establishments, when such goods are used primarily for
personal use or consumption of any employee and
Any goods which have no relationship whatsoever with
manufacturer of final products.
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 33
CENVAT CREDIT
CENVAT Credit changes
1.CENVAT availment on inputs and input services
Position prior
To 01.10.2014
Position Between
Position
01.10.2014On 01.03.2015
01.03.2015
For availing
Vide notification
Vide notification
CENVAT Credit
21/20146/2015No time limit was
11.07.2014 time
01.03.2015 time limit
as such prescribed limit of
of 1 year from the
for inputs, input 6 months from
date of document for
services, capital the date of
inputs and input
goods
document for
services
inputs and input
services
No time limit restriction for availment of CENVAT credit on
capital goods
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 36
36
CENVAT CREDIT
Finance Minister has given final chance to avail CENVAT
Credit on inputs and input services for the differential
period between 02.03.2014 till 01.03.2015 as an effect of
above amendment, considering the hardship faced by the
tax payers owing to procedural difficulties
37
CENVAT CREDIT
Position after
01.04.2015
CENVAT Credit of the service tax paid
under Partial Reverse Charge by the
service receiver shall be allowed
without linking the payment to the
service provider
Accordingly, CENVAT credit of service
tax liable to be paid directly to the
Government exchequer by the service
recipient, in case of full as well as
partial reverse charge, shall be allowed
as soon as the said tax is paid wef
01.04.2015
38
CENVAT CREDIT
Position prior
Position after
To 01.04.2015
01.04.2015
For availing CENVAT Credit it
CENVAT Credit of the service tax
was necessary to payment of
paid under Full Reverse Charge
value of the taxable service
by the service receiver shall be
provided in the invoice and the allowed without linking the
service tax liable to be paid
payment to the service provider
directly as a recipient of the
Accordingly, CENVAT credit of
service. Further, value of
service tax liable to be paid
service portion and service tax directly to the Government
was required to be paid within
exchequer by the service
90 days of the invoice / bill /
recipient.
challan to the service provider.
A failure of such payment was
requiring person availing
CENVAT credit to PAY and
CAamount
Shekhar Sane
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39
equal
to CENVAT
imported goods.
Double credit on the same document.
Availment of Cenvat credit without receipt of material.
Rejection / Return of inputs without reversal of Cenvat credit
Full credit on capital goods (instead of 50%) in the year of
receipt of capital goods.
Availing Cenvat Credit as well as Depreciation on the same
capital goods.
Cenvat Credit on inputs used in manufacture of exempt
goods.
Cenvat Credit on inputs used in exempt output services.
Cenvat Credit on goods used for trading.
Cenvat Credit on ineligible capital goods such as storage
CA Shekhar
Sane
- 98230-91364air
(shekharsane@vsnl.net
shekhar@cashekharsane.com) 40
40
racks,
furniture,
conditioners and
etc..
off.
Cenvat Credit on ineligible goods such as HSD, LDO, goods
used in construction of factory building etc.
Cenvat Credit on ineligible services such as outdoor catering
services, rent a cab services, services used for construction
of factory / office building.
Cenvat Credit on the basis of ineligible documents such as
photocopy of invoices, photocopy of Bill of Entry, Debit notes
etc.
Utilization of credit of cess for payment of excise duty.
Non receipt of goods sent for job work within specified time
of 180 days.
Non maintenance of separate account for dutiable and
exempted products.
Premature availing and utilization of credit.
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 41
41
CENVAT Credit
Availment and Utilization
Utilisation
Cenvat Credit
The term CENVAT credit as used in various rules means
aggregate of
Basic Excise Duty and corresponding CVD on imports.
Service Tax on input services paid u/s 66B of the Finance Act
(wef 1-7-2012)
Additional Customs Duty paid u/s 3(5) of Customs Tariff Act
(SAD or Special CVD, this credit is not available for service
providers)
National Calamity Contingent Duty (NCCD) leviable under
sec.136 of Finance Act, 2001 and corresponding CVD paid on
imported goods. This Credit can however be used for
payments of NCCD on outputs only and not for any other duty
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 49
Cenvat Credit
Additional Excise Duty paid u/s 85 of Finance Act 2005 on pan
masala and certain tobacco products. This credit can be
utilised for payment of this duty only, any other credit can not
be utilised and balance needs to be paid in cash only.
Central Excise Duty paid on capital goods at the time of
debonding of EOU.
Buyer / User can avail cenvat credit of the amount paid under
rule 3(5) or 3(5A) on inputs and capital goods removed as
such or after use.
XYZ Ltd. is manufacturing gas pipes. From the following details, compute
CENVAT credit admissible to PQR Ltd. under CENVAT Credit Rules, 2004:
Duties (including Education Cess) paid on purchases are detailed below
Particulars
Raw Steel
Gas pipe making machine
Spare parts for the above
machine
Grease and oil
Office Equipment
Light Diesel Oil
Amount
25000
20000
10000
2500
15000
15000
Amount
Raw Steel
25000
10000
42500
5000
2500
Notes:In respect of
1) Gas Pipe Making Machine and Spare parts , being capital goods ,
only 50% credit is available (Rule 2(a) along with Rule 4(2)(a) of
CENVAT Credit Rules 2004
2) A Manufacturer can avail credit on office equipment since the
definition of capital goods under rule 2(a) of CENVAT Credit Rules
2004 specifically excludes any equipment/appliance used in an
office
3) No credit is available on Light Diesel Oil since definition on input
under Rule 2(k) of CENVAT Credit Rules, 2004 specifically
excludes the same.
CENVAT CREDIT
AVAILED ON
INPUTS
1,00,000/-
ON SERVICES
2,00,000/-
SERVICE TAX
LIABILITY
10,00,000/-
CAShekhar
ShekharSane
Sane- -98230-91364
98230-91364(shekharsane@vsnl.net
(shekharsane@vsnl.netand
andshekhar@cashekharsane.com)
shekhar@cashekharsane.com) 62
CA
Particulars
Amount
1,00,000/-
2,00,000/-
3,00,000/-
CAShekhar
ShekharSane
Sane- -98230-91364
98230-91364(shekharsane@vsnl.net
(shekharsane@vsnl.netand
andshekhar@cashekharsane.com)
shekhar@cashekharsane.com) 64
CA
1,50,000/
-
1,50,000/
-
Amount
10,00,000/-
1,50,000/-
8,50,000/-
CAShekhar
ShekharSane
Sane- -98230-91364
98230-91364(shekharsane@vsnl.net
(shekharsane@vsnl.netand
andshekhar@cashekharsane.com)
shekhar@cashekharsane.com) 65
CA
Percentage
10%
CAShekhar
ShekharSane
Sane- -98230-91364
98230-91364(shekharsane@vsnl.net
(shekharsane@vsnl.netand
andshekhar@cashekharsane.com)
shekhar@cashekharsane.com) 66
CA
Other
Capital
Goods
Year 2
8%
Year 3
5%
Year 4 and 5 1%
2.5%
Quarter for
each year
Facts
Whether Service provider
is eligible for Special
CVD as CENVAT credit
Discussion
No
It is called as Additional
Customs Duty leviable
u/s 3(5) of the Customs
Tariff Act,1975
Inward transportation of
capital goods / inputs
Refer Rule 2(I) Yes
allowed
No
Depreciation benefit vs
CENVAT credit benefit
Refer Rule 4(4)
Facts
Whether a manufacturer can avail
duties paid for following items as
CENVAT credit:i) Petrol which is use among other
inputs
ii) Motor Vehicle used by Director of
Company
iii) Air-conditioner used in an office
Is it compulsory that the inputs /
capital goods are to be purchased
only from the manufacturers for the
purpose of availment of credit?
Discussion
Not Eligible
Not Eligible
Not Eligible
No.
Refer Rule 9 of
CENVAT Credit Rules,
2004.)1st and 2nd Stage
Dealer. Both should be
registered
Whether manufacturer can avail
Yes eligibility is on
CENVAT credit in the month of
Receipt basis
September
though
inputs are
Refer Rule 4(1) 77
CA Shekhar Sane - 2015,
98230-91364
(shekharsane@vsnl.net
and shekhar@cashekharsane.com)
Facts
Discussion
X Ltd. A manufacturer
wants to take CENVAT
credit of duties on input
service. Whether he can
avail such credit even
payment is not made
against invoice of such
input service?
Yes.
Yes.
Transfer of inputs and Capital goods
to new ownership
Refer Rule 10(1)
Facts
Discussion
Penal provision
Refer Rule 15 Credit taken or Rs.
2000 whichever is higher
Yes
Refer Chapter 5 Para 3.7 of CBECs
Excise Manual of Supplementary
Instructions 2005- relation of inputs
to dutiable final product, directly or
indirectly CENVAT credit is eligible.
Can not be denied since
intermediary is exempt as final
product is dutiable
Facts
In above case, if Y Ltd. is using
only 50% of input services for
exported output services and
remaining for taxable output
service
W Ltd. wants to take credit of
duty paid on inputs, which are
damaged and were found to be
not usable. Can it be availed?
Discussion
Rule 5
proportionate refund
(i.e. Export T/O Total
T/O) X Net Cenvat
Credit
No
If damage is noticed
prior to usage
Refer Rule 2(k)
goods used in
factory
X Ltd. wants to take credit on
Yes
duty paid on inputs, based on
Case law CCEx &
Xerox copy of invoice, which are Cus. Vadodara II vs.
attested by Range
Steelco. Gujrat Ltd.
Superintendent of supplier.
2010 (255) ELT 518
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 80
Whether Credit can be availed? (Guj.)
Facts
Discussion
No
Rule 3(4)
On such goods concessional
ED of 2% is payable subject
to non-availment of CENVAT
credit on inputs and input
services
Facts
Discussion
Facts
Whether CENVAT Credit on
services used in repairs /
renovation of factory or office is
available?
CENVAT credit in respect of duty
paid on capital goods used
exclusively in the manufacture of
dutiable goods cleared
Discussion
Yes eligible
Rule 2(l)
88
Facts
Discussion
ED is payable on the
transaction value
Yes eligible
Rule 4 Provided that,
they are used for
providing taxable
output service
Correct
documentation be
maintained
Facts
Discussion
Yes
Flex Engineering v.
Commissioner of Central
Excise (276) ELT 153 (SC)
process of testing is
connected with the sale
without which sale could not
have been completed
It was an essential ingredient
of process of manufacturer
itself
Facts
Discussion
No
Applicable only if utilized
As per Rule 14 of CCR 2004
1] 6(3A)(b)(i)
2] 6(3A)(b)(ii)
3] 6(3A)(b)(iii)
Total
= Amount to be reversed every month on
At
the end of the1+2+3
year,
assessee should calculate the ratios on
provisional basis
actual basis, make fresh calculations and pay difference, if
any, before 30th June. In case of excess payment, he can
adjust the difference himself by taking credit.
In the first year of production or provision of service, calculation
should be made after year is over, and amount attributable to
cenvat credit on exempted products or services be paid.
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 93
(B/C * D)
Facts
Discussion
Z, manufacturer, has paid excise Refer Rule 4(5)(a) (i) inputs to
duty on inputs and sent them to be received back within 180
job worker for processing on day days
of receipt itself. Job worker sent
50% of processed inputs within
4 months and balance 50% after
8 months.
In above case, instead of inputs, Rule 4(5)(a)(ii)- Capital goods
capital goods has been sent to to be received back within 2
job worker
years
Assessee is engaged in
Fixed assets were given to
manufacturing . It has following another manufacturer for
fixed assets
producing goods similar to
a) Jigs
specifications of the
b) Fixtures
manufacturer
c) Moulds
Assessee is entitled to claim
CENVAT paid on above Rs.
CENVAT- Rule 4(5)(b) of CCR
50000
2004
50% in the first year and
remaining
in the subsequent
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net
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101
Case Study
Rs
Rs.
98,800
Nil
On Capital Goods :
Basic Customs Duty
Nil
5,000
4,000
98,800
9,000
1,07,880
Rs.
1,21,128
NIL
1,21,128
1,07,880
13,248
Notes :
1. Intermediate goods are exempt from
payment of excise duty
if the same are consumed captively for
manufacture of dutiable final products.
2. Since input A is used in manufacture of
dutiable intermediate product P. CENVAT
credit will be available on the entire
quantity of the same regardless of the
processing
loss as that quantity of inputs is also used
in the manufacture of intermediate product.
CA Shekhar Sane - 98230-91364 (shekharsane@vsnl.net and shekhar@cashekharsane.com) 118
Highlights of
CENVAT Scheme
Cenvat Credit shall not be allowed after six months of the date
of document (Invoice Date / Challan Date (w.e.f. 01.09.2014)
provider
Inputs can be sent to Job Worker
No credit of service in J&K
Input goods eligible for Cenvat to
manufacturer
?
Question & Answer
Session
126
Thank You!!
Contact : CA Shekhar Sane
(M) 098230 91364
(O) 020-2446 1345
E-Mail : shekharsane@vsnl.net
shekhar@cashekharsane.com
Website : www.cashekharsane.com
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