Time Limit for Availing CENVAT Credit

A manufacturer or output service provider shall avail the CENVAT credit in respect of input and input service within six months of the date of issue of bill/invoice/challan. The credit shall not be allowed after the expiry of the said six months which effect from 1st September 2014.

[Proviso to Rule 4(1) and Rule 4(7) of CENVAT Credit Rules, 2004]

It has now been clarified that the condition of six months shall not be applicable when re-credit of the CENVAT credit reversed, on account of the following situations, is taken.

Situation 1:

A manufacturer or output service provider shall avail the CENVAT credit in respect of input service on or after the date of receipt of the bill/invoice/challan is received.

However, the CENVAT Credit availed is required to be paid back by the manufacturer or service provider, in case the payment of value of input service and service tax paid or payable thereon is not made within three months of date of bill/invoice/challan except in case of full reverse charge. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back as service tax shall be re-credited.

[Third proviso to Rule 4(7) of CENVAT Credit Rules, 2004]

The criteria of six months shall not be applicable while taking the re-credit of the CENVAT credit reversed.

Situation 2:

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 where any provision to write off fully or partially has been made in the Books of Account, then the manufacturer or service provider is required to pay an amount equivalent to the CENVAT credit so taken.

However, when the inputs or capital goods are subsequently used in the manufacture of final goods or to provide the output service, the amount so paid shall be taken as CENVAT credit.

[Rule 3(5B) of CENVAT Credit Rules, 2004]

The criteria of six months shall not be applicable while taking the re-credit of the CENVAT credit reversed.

Situation 3:

The manufacturer or output service provider shall be allowed to avail the CENVAT credit on inputs or capital goods sent, as such or after being partly processed, to job worker for further processing, testing, repairs, reconditioning or any other related activities and it is established that the goods are received back in the factory within 180 days of their being sent to the job worker. 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 shall be taken as CENVAT credit.

[Rule 4(5) (a) of CENVAT Credit Rules,2004]

The criteria of six months shall not be applicable while taking the re-credit of the CENVAT credit reversed. It has been clarified by the CBEC that the purpose of the restriction of time limit of six months is to ensure that after the issue of the bill/invoice/challan when credit is taken for the first time, the credit should be taken 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 above three situations, 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.

[Circular No. 990/14/2014-CX-8 dated 19.11.2014]

Source – Tax Talk, Kolkata

 

 

 

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