(This Rule Supersessed vide NTF. NO. 20/2017-CE (NT), DT. 30/06/2017)

CENVAT Credit Rules, 2004 (Part - I)
 

NTF. NO. 23/2004-CE(N.T.), DT. 10/09/2004 - In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994) and in supersession of the CENVAT Credit Rules, 2002 and the Service Tax Credit Rules, 2002, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely:-

1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2017.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 15/2017-CE (NT), DT. 12/06/2017 )

[OLD-

1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2017.

(2) They shall come into force on the 23rd day of April, 2017.]

(Above rule 1 has been amended vide NTF. NO. 10/2017-CE (NT), DT. 13/04/2017)

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 36/2016-CE (NT), DT. 26/07/2016 )

[OLD- (1) These rules may be called the CENVAT Credit (Seventh Amendment) Rules, 2016.

(2) They shall come into force on 1st of June, 2016.]

(Above rule 1 has been amended vide NTF. NO. 28/2016-CE (NT), DT. 26/05/2016  )

[OLD- (1) These rules may be called the CENVAT Credit (Sixth Amendment) Rules, 2016.

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 27/2016-CE (NT), DT. 14/05/2016  )

[OLD-1.(1) These rules may be called the CENVAT Credit (Fifth Amendment) Rules, 2016.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 24/2016-CE (NT), DT. 13/04/2016 )

[OLD-  (1) These rules may be called the CENVAT Credit (Fourth Amendment) Rules, 2016.

(2) They shall come into force from the date of their publication in the official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 23/2016-CE (NT), DT. 01/04/2016 )

[OLD- (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2016.

(2) Save as otherwise provided, they shall come into force on the 1st day of April, 2016.]

(Above rule 1 has been amended vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

[OLD-  1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2016.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 02/2016-CE (NT), DT. 03/02/2016 )

[OLD- 1. Short title and commencement.-

(1) These rules may be called the CENVAT Credit (First Amendment) Rules, 2016.

(2) They shall come into force with effect from the 1st day of March, 2015.]

(Above rule 1 has been amended vide NTF. NO. 01/2016-CE (NT), DT. 01/02/2016 )

[OLD- 1. (1) These rules may be called the CENVAT Credit (Fifth Amendment) Rules, 2015.

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 22/2015-CE (NT), DT. 07/10/2015 )

[OLD- 1. (1) These rules may be called the CENVAT Credit (Fourth Amendment) Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 21/2015-CE (NT), DT. 07/10/2015 )

[OLD- 1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2015.

(2) They shall come into force with effect from 1st of June, 2015. ]

(Above rule 1 has been amended vide NTF. NO. 14/2015-CE (NT), DT. 19/05/2015)

[OLD- 1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF.  NO. 12/2015-CE (NT), DT. 30/04/2015 )

[OLD-1. (1) These rules may be called the CENVAT Credit (Amendment) Rules, 2015.

(2) Save as otherwise provided in these rules, they shall come into force on the 1st day of March, 2015. ]

(Above rule 1 has been amended vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015)

[OLD-1. (1) These rules may be called the CENVAT Credit (Eighth Amendment) Rules, 2014.

(2) They shall come into force from the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 26/2014-CE (NT), DT. 27/08/2014)

[OLD-1. (1) These rules may be called the CENVAT Credit (Seventh Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 25/2014-CE (NT), DT. 25/08/2014)

[OLD- (1) These rules may be called the CENVAT Credit (Sixth Amendment) Rules, 2014.

(2) Save as otherwise provided in these rules, they shall come into force on 11th day of July, 2014.

(Above rule 1 has been amended vide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014)

[OLD-(1) These rules may be called the CENVAT Credit (Fifth Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette. ]

(Above rule 1 has been amended vide NTF. NO. 15/2014-CE (NT), DT. 21/03/2014)

[OLD- (1) These rules may be called the CENVAT Credit (Fourth Amendment) Rules, 2014.

(2) They shall come into force from the 1st day of April, 2014.

(Above rule 1 has been amended vide NTF. NO. 09/2014-CE (NT), DT. 28/02/2014)

[OLD- (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2014.

(2) They shall come into force on the 1st day of April, 2014.

(Above rule 1 has been amended vide NTF. NO. 05/2014-CE (NT), DT. 24/02/2014)

[OLD- (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 02/2014-CE (NT), DT. 20/01/2014)

[OLD-

(1) These rules may be called the CENVAT Credit (First Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 01/2014-CE (NT), DT. 08/01/2014)

[OLD-

(1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2013.

(2) They shall come into force with effect from the 1st day of March, 2014.

(Above rule 1 has been amended vide NTF. NO. 18/2013-CE (NT), DT. 31/12/2013)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2013.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 12/2013-CE (NT), DT. 27/09/2013)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Amendment) Rules, 2013.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 03/2013-CE (NT), DT. 01/03/2013)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Sixth Amendment) Rules, 2012.

(2) They shall come into force on the 1st day of July, 2012.

(Above rule 1 has been amended vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Fifth Amendment) Rules, 2012.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 25/2012-CE (NT), DT. 08/05/2012)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Fourth Amendment) Rules, 2012.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 21/2012-CE (NT), DT. 27/03/2012)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2012.

(2) Save as otherwise provided in these rules, they shall come into force on the 1st day of April, 2012.

(Above rule 1 has been amended vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2012.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 03/2012-CE (NT), DT. 12/03/2012)

[OLD-

1. (1) These rules may be called the CENVAT Credit (First Amendment) Rules, 2012.

(2) They shall come into force from the date of publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 01/2012-CE (NT), DT. 09/02/2012)

[OLD-

1. (1) These rules may be called the CENVAT Credit ( Fourth Amendment) Rules, 2011.

(2) They shall come into force on the 1st day of October, 2011.

(Above rule 1 has been amended vide NTF. NO. 22/2011-CE (NT), DT. 14/09/2011)

[OLD-

1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2011.

(2) They shall come into force on the 1st day of April, 2011.

(Above rule 1 has been amended vide NTF. NO. 13/2011-CE (NT), DT. 31/03/2011)

[OLD-

1. (a) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2011.

(b) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 09/2011-CE (NT), DT. 24/03/2011)

[OLD-

1. (a) These rules may be called the CENVAT Credit (Amendment) Rules, 2011.

(b) Save as otherwise provided in these rules, they shall come into force on the 1st day of April, 2011.

(Above rule 1 has been amended vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011)

[OLD-
1. (1) These rules may be called the CENVAT Credit (Fifth Amendment) Rules, 2010.

(2) They shall come into force on the date of their publication in the Official Gazette.

(Above rule 1 has been amended vide NTF. NO. 29/2010-CE(N.T.), DT. 24/09/2010)

[OLD-
1. (1) These rules may be called the CENVAT Credit (Fourth Amendment) Rules, 2010.

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 27/2010-CE(N.T.), DT. 01/07/2010)

[OLD-
1. (1) These rules may be called the CENVAT Credit (Third Amendment) Rules, 2010.

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 26/2010-CE(N.T.), DT. 29/06/2010)

[OLD-
1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2010.

(2) They shall come into force on the date of their publication in the Official Gazette.]

(Above rule 1 has been amended vide NTF. NO. 25/2010-CE(N.T.), DT. 22/06/2010)

[OLD-
1.(1) These rules may be called the CENVAT Credit (Amendment) Rules, 2010.

(2) They shall come into force on 1st June, 2010.]

(Above rule 1 has been amended vide NTF. NO. 21/2010-CE(N.T.), DT. 18/05/2010)

[OLD-
(a) These rules may be called the CENVAT Credit (Amendment) Rules, 2010.

(b) Except, clause (i) of rule 3, the provisions of these rules shall come into force on the date of their publication in the official Gazette and clause (i) of rule 3 shall come into force on and from the 1st day of April, 2010.]

(Above rule 1 has been amended vide NTF. NO. 06/2010-CE(N.T.), DT. 27/02/2010)

(Above rule 1 has been amended vide NTF. NO. 22/2009-CE(N.T.), DT. 07/09/2009)

(Above rule 1 has been amended vide NTF. NO. 16/2009-CE(N.T.), DT. 07/07/2009)

(Above rule 1 has been amended vide NTF. NO. 48/2008-CE(N.T.), DT. 05/12/2008)

(Above rule 1 has been amended vide NTF. NO. 35/2008-CE(N.T.), DT. 24/09/2008)

(Above rule 1 has been amended vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008)

(Above rule 1 has been amended vide NTF. NO. 39/2007-CE(N.T.), DT. 13/11/2007)
(Above rule 1 has been amended vide NTF. NO. 35/2007-CE(N.T.), DT. 14/09/2007)
(Above rule 1 has been amended vide NTF. NO. 33/2007-CE(N.T.), DT. 07/09/2007)
(Above rule 1 has been amended vide NTF. NO. 32/2007-CE(N.T.), DT. 03/08/2007)
(Above rule 1 has been amended vide NTF. NO. 27/2007-CE(N.T.), DT. 12/05/2007)
(Above rule 1 has been amended vide NTF. NO. 26/2007-CE(N.T.), DT. 11/05/2007)
(Above rule 1 has been amended vide NTF. NO. 24/2007-CE(N.T.), DT. 25/04/2007)
(Above rule 1 has been amended vide NTF. NO. 19/2007-CE(N.T.), DT. 09/03/2007)
(Above rule 1 has been amended vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)
(Above rule 1 has been amended vide NTF. NO. 07/2007-CE(N.T.), DT. 21/02/2007)
(Above rule 1 has been amended vide NTF. NO. 31/2006-CE(N.T.), DT. 30/12/2006)
(Above rule 1 has been amended vide NTF. NO. 19/2006-CE(N.T.), DT. 30/09/2006)
(Above rule 1 has been amended vide NTF. NO. 10/2006-CE(N.T.), DT. 25/04/2006)
(Above rule 1 has been amended vide NTF. NO. 09/2006-CE(N.T.), DT. 21/04/2006)
(Above rule 1 has been amended vide NTF. NO. 08/2006-CE(N.T.), DT. 19/04/2006)
(Above rule 1 has been amended vide NTF. NO. 06/2006-CE(N.T.), DT. 20/03/2006)
(Above rule 1 has been amended vide NTF. NO. 04/2006-CE(N.T.), DT. 14/03/2006)
(Above rule 1 has been amended vide NTF. NO. 28/2005-CE(N.T.), DT. 07/06/2005)
(Above rule 1 has been amended vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)
(Above rule 1 has been amended vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)
(Above rule 1 has been amended vide NTF. NO. 20/2005-CE(N.T.), DT. 02/05/2005)
(Above rule 1 has been amended vide NTF. NO. 18/2005-CE(N.T.), DT. 12/04/2005)
(Above rule 1 has been amended vide NTF. NO. 16/2005-CE(N.T.), DT. 03/03/2005)
(Above rule 1 has been amended vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)
(Above rule 1 has been amended vide NTF. NO. 03/2005-CE(N.T.), DT. 28/01/2005)
(Above rule 1 has been amended vide NTF. NO. 38/2004-CE(N.T.), DT. 25/11/2004)
(Above rule 1 has been amended vide NTF. NO. 24/2004-CE(N.T.), DT. 17/09/2004)

[OLD-(1) These rules may be called the CENVAT Credit Rules, 2004.

(2) They extend to the whole of India:

Provided that nothing contained in these rules relating to availment and utilization of credit of service tax shall apply to the State of Jammu and Kashmir.

(3) They shall come into force from the date of their publication in the Official Gazette. ]

2. Definitions.-In these rules, unless the context otherwise requires,-

(a) "capital goods" means:-
(A) the following goods, namely:-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 and wagons of sub-heading 860692 [OLD- heading 6804] [OLD- heading No. 68.02 and sub-heading No. 6801.10 ] of the First Schedule to the Excise Tariff Act;

(In item (i) the word & figures "heading 6804 and wagons of sub-heading 860692" has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

(In above item (i) the words and figures "heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804" has been substituted vide NTF. NO. 07/2007-CE(N.T.), DT. 21/02/2007)

(ii) pollution control equipment;
(iii) components, spares and accessories of the goods specified at (i) and (ii);
(iv) moulds and dies, jigs and fixtures;
(v) refractories and refractory materials;
(vi) tubes and pipes and fittings thereof; [OMITTED - and ]
(vii) storage tank; and [OLD- storage tank, ]

(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tippers ;

used-

(In above item (viii) the words "but including dumpers and tippers" has been inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(In Rule 2, clause (a), sub-clause (A), in item (vi) the word "and" - omitted & in item (vii) the word "storage tank; and" - substituted & item (viii) inserted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012)

(1) in the factory of the manufacturer of the final products, [OMITTED- but does not include any equipment or appliance used in an office]; or

(In condition (1) the words "but does not include any equipment or appliance used in an office" has been omitted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

(1A) outside the factory of the manufacturer of the final products for generation of electricity or for pumping of water for captive use within the factory; or;

(In condition (1A) the words "or for pumping of water" has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

(Above item (1A) has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011)

(2) for providing output service;

(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for-

(i) providing an output service of renting of such motor vehicle; or

(ii) transportation of inputs and capital goods used for providing an output service; or

(iii) providing an output service of courier agency.

(C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of-

(i) transportation of passengers; or

(ii) renting of such motor vehicle; or

(iii) imparting motor driving skills

(Above sub-clauses (B) & (C) substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD-
(B) motor vehicle falling under tariff headings 8702, 8703, 8704, 8711 and their chassis, registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of section 65 of the Finance Act;

(In above sub-clause (B),  the words "falling under tariff headings 8702, 8703, 8704, 8711 and their chassis," inserted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012)

(C) dumpers or tippers, falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), registered in the name of provider of output service for providing taxable services as specified in sub-clauses (zzza) and (zzzy) of clause (105) of section 65 of the said Finance Act;]

(Above sub-clause (C) has been inserted vide NTF. NO. 25/2010-CE(N.T.), DT. 22/06/2010)

(D) components, spares and accessories of motor vehicles which are capital goods for the assessee;

(Above sub-clause (D) has been substituited vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012)

[OLD- (D) components, spares and accessories of motor vehicles, dumpers or tippers, as the case may be, used to provide taxable services as specified in sub-clauses (B) and (C); ]

(Above sub-clause (D) has been inserted vide NTF. NO. 29/2010-CE(N.T.), DT. 24/09/2010)

(b) "Customs Tariff Act" means the Customs Tariff Act, 1975 (51 of 1975);

(c) "Excise Act" means the Central Excise Act, 1944 (1 of 1944);

(d) "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; goods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 or under entries at serial numbers 67 and 128 of Notification No. 12/2012-CE, dated the 17th March, 2012 is availed [OLD- and goods in respect of which the benefit of an exemption under notification No. 1/2011-CE, dated the 1st March, 2011 is availed ]

(In above rule 2, in clause (d) the words "goods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 or under entries at serial numbers 67 and 128 of Notification No. 12/2012-CE, dated the 17th March, 2012 is availed" has been substituted vide NTF. NO. 21/2012-CE (NT), DT. 27/03/2012)

(In above clause (d) the words "and goods in respect ..........." has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

(e) “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 –

(a) which is exported in terms of rule 6A of the Service Tax Rules, 1994; or

(b) by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India;

(Above portion has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  with effect from 1st March, 2016)

[OLD- but shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994.]

(Above clauses (e) substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD- (e) "exempted services" means taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act; and taxable services 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. ]
 

Explanation.- For the removal of doubts, it is hereby clarified that "exempted services" includes trading

(In above clause (d) the words "and taxable services ..........." has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011)

(f) "Excise Tariff Act" means the Central Excise Tariff Act, 1985 (5 of 1986);

(g) "Finance Act" means the Finance Act, 1994 (32 of 1994);

(h) "final products" means excisable goods manufactured or produced from input, or using input service;

(ij) "first stage dealer" means [OMITTED - a dealer, who purchases the goods directly from ] ,-

(i) a dealer, who purchases the goods directly from the manufacturer under the cover of an invoice [OLD- the manufacturer under the cover of an invoice ] issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from 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, under cover of an invoice; or

(ii) an importer who sells goods imported by him under the cover of an invoice on which CENVAT credit may be taken and such invoice shall include an invoice issued from his depot or the premises of his consignment agent;

(In clause (ij) the words "a dealer, who purchases the goods directly from" - omitted, in sub-clause (i) the words "a dealer, who purchases the goods directly from the manufacturer under the cover of an invoice" & sub-clause (ii) substituted vide NTF. NO. 18/2013-CE (NT), DT. 31/12/2013)

[OLD- (ii) an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice;]

(k) "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 the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or

(iii) all goods used for generation of electricity or steam or pumping of water for captive use; or

(iv) all goods used for providing any output service; or [OLD- output service];

(v) all capital goods which have a value upto ten thousand rupees per piece .

(In sub-clause (iii) the words "or pumping of water"- inserted , sub-clause (iv) the words "output service; or" - substitued  & sub-clause (v) inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

but excludes-

(A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;

(B) 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 the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;

(Above sub-clauses (B) substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD-
(B) any goods used for-

(a) construction 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 the provision of any taxable service specified in sub-clauses (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act; ]

(C) capital goods, except when,-

(i) used as parts or components in the manufacture of a final product; or

(ii) the value of such capital goods is upto ten thousand rupees per piece;

(Above item (C) has been substitued vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

[OLD- (C) capital goods except when used as parts or components in the manufacture of a final product; ]

(D) motor vehicles;

(E) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and

(F) any goods which have no relationship whatsoever with the manufacture of a final product.

Explanation.-For the purpose of this clause, "free warranty" means a warranty provided by the manufacturer, the value of which is included in the price of the final product and is not charged separately from the customer;

(Above clause (k) has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011)

[OLD-
(k) "input" means-

(i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production;

(ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;

Explanation 1.- The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever.

Explanation 2.- Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer but shall not include cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods. ]

(In above Explanation 2 "but shall not include cement, angles, channels, Centrally Twisted Deform bar(CTD) or Thermo Mechanically Treated bar(TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods" has been inserted vide NTF. NO. 16/2009-CE(N.T.), DT. 07/07/2009)

(I) input service” means,-

(i) services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services and the said imported goods are his inputs or capital goods; or

(ii) any service used by a provider of output service for providing an output service; or

(iii) any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal’;

(In above rule 2, in clause (l), for the words starting with ‘“input service” means’ and ending with “clearance of final products upto the place of removal,” has been substituted vide NTF. NO. 10/2017-CE (NT), DT. 13/04/2017 )

[OLD- (l) "input service" means any service, -

(i) used by a provider of  output service [OLD- taxable service ] for providing an output service; or

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,]

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; but excludes  [OLD - but excludes services ],-

(In above clauses (l), in sub-clause (i) the words "output service", in sub-clause (ii)  the words "but excludes" substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are 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 the provision of one or more of the specified services; or;

[OLD -(A) specified in sub-clauses (p), (zn), (zzl), (zzm), (zzq), (zzzh) and (zzzza) of clause (105) of section 65 of the Finance Act (hereinafter referred as specified services), in so far as they are used for-

(a) construction 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 the provision of one or more of the specified services; or ]

(B) services provided by way of renting of a motor vehicle [OLD- specified in sub-clauses (o) and (zzzzj) of clause (105) of section 65 of the Finance Act ], in so far as they relate to a motor vehicle which is not a capital goods; or
 

(BA) service of general insurance business, servicing, repair and maintenance , in so far as they relate to a motor vehicle which is not a capital goods, except when used by -

(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person ; or

(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or;

[OLD-
(BA) specified in sub-clauses (d) and (zo) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle which is not a capital goods,  [OLD- specified in sub-clauses (d) and (zo) of clause (105) of section 65 of the Finance Act,] except when used by —

(In above rule 2, in clause (l) the words "specified in sub-clauses (d) and (zo) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle which is not a capital goods," has been substituted vide NTF. NO. 21/2012-CE (NT), DT. 27/03/2012 wef 01/04/2012)

(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by him; or

(b) a provider of output service as specified in sub-clause (d) of clause (105) of section 65 of the Finance Act, in respect of a motor vehicle insured or reinsured by him; or. ]

(In above clauses (l), sub-clause (A) & (BA) -substituted,  in sub-clause (B) the words "services provided by way of renting of a motor vehicle" substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(In clause (l),  sub-clause (B) has been substituited vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012)

[OLD- (B) specified in sub-clauses (d), (o), (zo) and (zzzzj) of clause (105) of section 65 of the Finance Act, in so far as they relate to a motor vehicle except when used for the provision of taxable services for which the credit on motor vehicle is available as capital goods; or ]

 (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;

Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis.

(Above Explanation has been inserted vide NTF. NO. 02/2016-CE (NT), DT. 03/02/2016 )

(Above clause (l) has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011)

[OLD-

(l) "input service" means any service,-

(i) used by a provider of taxable service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, upto the place of removal,[OLD- clearance of final products from the place of removal, ]

and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

(In above clause (l) the words "clearance of final products, upto the place of removal," has been substituted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008) ]

(m) "input service distributor" means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider or an outsourced manufacturing unit, as the case may be;

(In clause (m) the words "or an outsourced manufacturing unit" has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

(n) "job work" means processing or working upon of raw material or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for aforesaid process and the _expression "job worker" shall be construed accordingly;

(na) "large taxpayer" shall have the meaning assigned to it in the Central Excise Rules, 2002;

(naa) "manufacturer" or "producer",-

(i) in relation to articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under sub-rule (1) of rule 9 of the Articles of Jewellery (Collection of Duty) Rules, 2016;"

(ia) in relation to articles of precious metals falling under heading 7114 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under sub-rule (1) of rule 12AA of the Central Excise Rules, 2002;

(Above sub-clause (i) has been substituted vide NTF. NO. 36/2016-CE (NT), DT. 26/07/2016 )

[OLD- (i) in relation to articles of jewe llery or other artic les of precious metals falling under heading 7113 or 7114 as the case may be  [OLD- jewellery falling under heading 7113] of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under subrule (1) of rule 12AA of the Central Excise Rules, 2002; ]

(In above sub-clause (i) the words and figures "jewe llery or other artic les of precious metals falling under heading 7113 or 7114 as the case may be" has been substituted vide NTF. NO. 09/2011-CE (NT), DT. 24/03/2011)

(ii) in relation to goods falling under Chapters 61, 62 or 63 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under sub-rule (1A) of rule 4 of the Central Excise Rules, 2002;

(Above clause (naa) has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

[OLD-

(naa) manufacturer� or producer� in relation to articles of jewellery falling under heading 7113 of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under sub-rule (1) of rule 12AA of the Central Excise Rules, 2002; ]

(Above sub-rule (na) inserted and (naa) renumbered vide NTF. NO. 19/2006-CE(N.T.), DT. 30/09/2006)

(Clause (na)- new (naa) has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

(o) "notification" means the notification published in the Official Gazette;

(p) “output service” means any service provided by a provider of service located in the taxable territory but shall not include a service,-

(1) specified in section 66D of the Finance Act; or

(2) where the whole of service tax is liable to be paid by the recipient of service.’

(Above clauses (p) substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD-
(p) "output service" means any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service [OLD- any taxable service provided by the provider of taxable service ], to a customer, client, subscriber, policy holder or any other person, as the case may be, and the expressions "provider" and "provided" shall be construed accordingly;]

(In above clause (l) the words "any taxable service, excluding the taxable service referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, provided by the provider of taxable service" has been substituted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008)

[OMITTED-
Explanation.- For the removal of doubts it is hereby clarified that if a person liable for paying service tax does not provide any taxable service or does not manufacture final products, the service for which he is liable to pay service tax shall be deemed to be the output service. ]

(Above explanation has been omitted vide NTF. NO. 08/2006-CE(N.T.), DT. 19/04/2006)

(q) "person liable for paying service tax" has the meaning as assigned to it in clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994;

(qa) “place of removal” means-

(i) a factory or any other place or premises of production or manufacture of the excisable goods;

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;

(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory,

from where such goods are removed;

(Above clause (qa) inserted vide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014)

(r) "provider of taxable service" include a person liable for paying service tax;

(s) "second stage dealer" means a dealer who purchases the goods from a first stage dealer;

(t) words and expressions used in these rules and not defined but defined in the Excise Act or the Finance Act shall have the meanings respectively assigned to them in those Acts.

3. CENVAT credit.-

(1) A manufacturer or producer of final products or a provider of output service [OLD- provider of taxable service ] shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -

(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act;

Provided that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods –

(a) in respect of which the benefit of an exemption under notification No.1/2011-CE, dated the 1st March, 2011 is availed; or

(b) specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Notification No. 12/2012-CE,dated the 17th March, 2012 is availed

(In above rule 3, sub-rule (1), clause (i) proviso has been substituted vide NTF. NO. 21/2012-CE (NT), DT. 27/03/2012 wef 01/04/2012)

[OLD- Provided that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods in respect of which the benefit of an exemption under notification No.1/2011-CE, dated the 1st March, 2011 is availed;]

(Above proviso has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

(ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act;

(iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 ( 40 of 1978);

(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 ( 58 of 1957);

(v) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);

(vi) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);

(via) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);

(Clause (via) has been substituted vide NTF. NO. 27/2007-CE(N.T.), DT. 12/05/2007)

[OLD-
(via) the Secondary and Higher Education Cess on excisable goods leviable under clause (126) read with clause (128) of the Finance Bill, 2007, which by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), has the force of law;]

(vii) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii), (iii), (iv), (v), (vi) and (via)[OLD- and (vi);]

(In Above sub-rule (1), clause (via) - inserted & in clause (vii) the words ", (vi) and (via)" has been substituted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

[OMITTED - Provided that CENVAT credit shall not be allowed in excess of eighty-five per cent. of the additional duty of customs paid under sub-section (1) of section 3 of the Customs Tariff Act, on ships, boats and other floating structures for breaking up falling under tariff item 8908 00 00 of the First Schedule to the Customs Tariff Act;]

(Above proviso has been omitted vide NTF. NO. 01/2016-CE (NT), DT. 01/02/2016 )

(Above proviso has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

(viia) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [OMITTED- as substituted by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law ]:

(In clause (viia), portion beginning with the words and figures "as substituted by clause 72" and ending with the words "the force of law" has been omitted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

Provided that a provider of output service [OLD- provider of taxable service ] shall not be eligible to take credit of such additional duty;

(Clause (viia) has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

(viii) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);

(ix) the service tax leviable under section 66 of the Finance Act; and

(ixb) the service tax leviable under section 66B of the Finance Act.

(Above item (ixb) has been inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004),

(xa) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and

(Clause (xa) has been inserted vide NTF. NO. 27/2007-CE(N.T.), DT. 12/05/2007)

(xi) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ) [OLD- clause 85 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law ].

(In clause (xi), the words and figures "section 85 of Finance Act, 2005 (18 of 2005 )" has been substituted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

(Clause (xi) has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

Provided that the CENVAT credit shall be allowed to be taken of the amount equal to central excise duty paid on the capital goods at the time of debonding of the unit in terms of the para 8 of notification No. 22/2003-Central Excise, published in the Gazette of India, part II, Section 3,sub-section(i),vide number G.S.R. 265(E), dated, the 31st March,2003.

(Above proviso has been inserted vide NTF. NO. 35/2008-CE(N.T.), DT. 24/09/2008)

paid on-
(i) any input or capital goods received in the factory of manufacture of final product or by  [OLD- premises of ] the provider of output service on or after the 10th day of September, 2004; and

(In above item (i) the word "by" has been substiuted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(ii) any input service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004,
including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004.

Explanation.- For the removal of doubts it is clarified that the manufacturer of the final products and the provider of output service shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act on goods falling under heading 9801 of the First Schedule to the Customs Tariff Act.

(In above sub-rule (1) the words "provider of output service" has been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(1a) A provider of output service shall be allowed to take CENVAT credit of the Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016);

(Above sub-rule (1a) has been inserted vide NTF. NO. 28/2016-CE (NT), DT. 26/05/2016  )

(2) Notwithstanding anything contained in sub-rule (1), the manufacturer or producer of final products shall be allowed to take CENVAT credit of the duty paid on inputs lying in stock or in process or inputs contained in the final products lying in stock on the date on which any goods manufactured by the said manufacturer or producer cease to be exempted goods or any goods become excisable.

(3) Notwithstanding anything contained in sub-rule (1), in relation to a service which ceases to be an exempted service, the provider of the output service shall be allowed to take CENVAT credit of the duty paid on the inputs received on and after the 10th day of September, 2004 and lying in stock on the date on which any service ceases to be an exempted service and used for providing such service.

(4) The CENVAT credit may be utilized for payment of -

(a) any duty of excise on any final product; or
(b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or
(c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or
(d) an amount under sub rule (2) of rule 16 of Central Excise Rules, 2002; or
(e) service tax on any output service:

Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient

(Above Explanation at sub-rule (4) has been inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

Provided that while paying duty of excise or service tax, as the case may be, the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be:

Provided further that CENVAT credit shall not be utilised for payment of any duty of excise on goods in respect of which the benefit of an exemption under notification No. 1/2011-CE, dated the 1st March, 2011 is availed:

(Above proviso has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

Provided also [OLD- further ] that the CENVAT credit of the duty, or service tax, paid on the inputs, or input services, used in the manufacture of final products cleared after availing of the exemption under the following notifications of Government of India in the Ministry of Finance (Department of Revenue),-

(In above proviso the word "also" has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011 )

Provided also that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [OMITTED-as amended by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931, the force of law], shall be utilised for payment of service tax on any output service:

(Portion beginning with the words and figures "as substituted by clause 72" and ending with the words "the force of law," has been omitted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

Provided also that the CENVAT credit of any duty specified in sub-rule (1), except the National Calamity Contingent duty in item (v) thereof, shall not be utilized for payment of the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001)  [OLD- said National Calamity Contingent duty on goods falling under tariff items 85171210 and 85171290 respectively of the First Schedule of the Central Excise Tariff]:

(In above 5th proviso the words & figures "National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001)" has been substituted  vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  with effect from the 1st March, 2016)

(Above 5th Proviso has been inserted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008 w.e.f. 1st day of March, 2008)

Provided also that the CENVAT credit of any duty mentioned in sub-rule (1), other than credit of additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 )[OLD- clause 85 of the said Finance Bill, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931, the force of law ], shall not be utilised for payment of said additional duty of excise on final products:

(The words, figures and brackets "section 85 of Finance Act, 2005 (18 of 2005 )" has been substituted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

(Above 3rd & 4th provisos has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilised for payment of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015):

(Above 7th proviso has been inserted vide NTF. NO. 02/2016-CE (NT), DT. 03/02/2016 )

Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilized for payment of the Clean Energy Cess leviable under section 83 of the Finance Act, 2010 (14 of 2010)

(Above proviso has been inserted vide NTF. NO. 26/2010-CE(N.T.), DT. 29/06/2010)

Provided also that CENVAT credit shall not be utilised for payment of Infrastructure Cess leviable under sub-section (1) of section 162 of the Finance Act, 2016 [OLD- sub-clause (1) of clause 159 of the Finance Bill, 2016:]

(In above ninth proviso the words "sub-section (1) of section 162 of the Finance Act, 2016" has been substituted vide NTF. NO. 27/2016-CE (NT), DT. 14/05/2016  )

(Above 9th proviso has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  with effect from the 1st March, 2016)

Provided also that the Cenvat credit of any duty specified in sub-rule (1) shall not be utilised for payment of Krishi Kalyan Cess leviable under section 161 of the Finance Act, 2016 (28 of 2016);

(Above tenth proviso has been inserted vide NTF. NO. 28/2016-CE (NT), DT. 26/05/2016  )

(i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated 8th July, 1999];

(ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated 8th July, 1999];

(iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565 (E), dated the 31st July, 2001];

(iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the 14th November, 2002];

(v) No. 57/2002-Central Excise, dated 14th November, 2002 [G.S.R.. 765(E), dated the 14th November, 2002];

(vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003]; and

(vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717 (E), dated the 9th September, 2003],

shall, respectively, be utilized only for payment of duty on final products, in respect of which exemption under the said respective notifications is availed of.

(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9:

Provided that such payment shall not be required to be made where any inputs or capital goods are removed outside the premises of the provider of output service for providing the output service:

(In above Proviso the words "or capital goods" has been inserted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008 w.e.f. 1st day of March, 2008)

Provided further that such payment shall not be required to be made where any inputs are removed outside the factory for providing free warranty for final products:

(In above proviso has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

[OMITTED-
Provided further that such payment shall not be required to be made when any capital goods are removed outside the premises of the provider of output service for providing the output service and the capital goods are brought back to the premises within 180 days, or such extended period not exceeding 180 days as may be permitted by the jurisdictional Deputy Commissioner of Central Excise, or Assistant Commissioner of Central Excise, as the case may be, of their removal.]

[OMITTED -
Provided also [OLD- further ] that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:-

(In above proviso the word "also" has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

(a) for computers and computer peripherals:

for each quarter in the first year @ 10%

for each quarter in the second year @ 8%

for each quarter in the second year @ 8%

for each quarter in the fourth and fifth year @1%

(b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter. ]

(Above third proviso has been omitted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 wef 17/03/2012)

(Above proviso has been substituted vide NTF. NO. 06/2010-CE(N.T.), DT. 27/02/2010)

[OLD-
Provided also that if the capital goods, on which CENVAT Credit has been taken, are removed after being used, the manufacturer or provider of output service shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter of a year or part thereof from the date of taking the Cenvat Credit.]

(Above third proviso has been inserted vide NTF. NO. 39/2007-CE(N.T.), DT. 13/11/2007)

(5A) (a) If the capital goods, on which CENVAT credit has been taken, are removed after being used, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CENVAT Credit, namely:-

(i) for computers and computer peripherals:
 

for each quarter in the first year @ 10%

for each quarter in the second year @ 8%

for each quarter in the third year @ 5%

for each quarter in the fourth and fifth year @ 1%

(ii) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter:

Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.

(b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.

(Above sub-rule (5A) has been substituted  vide NTF. NO. 12/2013-CE (NT), DT. 27/09/2013)

[OLD-  (5A) If the capital goods, on which CENVAT credit has been taken, are removed after being used, whether as capital goods or as scrap or waste, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CEVAT Credit, namely:-

(a) for computers and computer peripherals :
 

for each quarter in the first year @ 10%

for each quarter in the second year @ 8%

for each quarter in the third year @ 5%

for each quarter in the fourth and fifth year @ 1%

(b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter:

Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.

(Above sub-rule (5A) has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 wef 17/03/2012)

[OLD-
(5A) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value. ]

(Above sub-rule (5A) has been inserted vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)

(5B) If the value of any,

(i) input, or

(ii) capital goods before being put to use,

on which CENVAT credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of account then [OLD- on which CENVAT credit has been taken is written off fully or where any provision to write off fully has been made in the books of account, then ] the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods:

(In above proviso thewords and letters "on which CENVAT credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of account then" has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of output services [OLD- taxable services ], the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules.

(In above proviso the word "output services" been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(Above sub-rule (5B) has been substituted vide NTF. NO. 16/2009-CE(N.T.), DT. 07/07/2009)

[OMITTED - Explanation. – If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), and (5B), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken.]

(Above Explanation has been omitted vide NTF. NO. 01/2014-CE (NT), DT. 08/01/2014)

(Above Explanation at rule 3, after sub-rule 5B has been inserted vide NTF. NO. 03/2013-CE (NT), DT. 01/03/2013)

[OLD-
(5B) If the value of any,

(i) input, or

(ii) capital goods before being put to use,

on which CENVAT Credit has been taken is written off fully or where any provision to write off fully has been made in the books of account, then the manufacturer shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods:

Provided that if the said input or capital goods is subsequently used in the manufacture of final products, the manufacturer shall be entitled to take the credit of the amount equivalent to the CENVAT Credit paid earlier subject to the other provisions of these rules.]

(Above sub-rule (5B) has been inserted vide NTF. NO. 26/2007-CE(N.T.), DT. 11/05/2007)

(5C).- Where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under rule 21 of the Central Excise Rules, 2002, the CENVAT credit taken on the inputs used in the manufacture or production of said goods and the CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods shall be reversed.

Explanation 1.- The amount payable under sub-rules (5), (5A), (5B) and (5C), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, where such payment shall be made on or before the 31st day of the month of March.

Explanation 2.- If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), (5B) and (5C), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken and utilised.

(In above sub-rule (5C) the words "and the CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods" & Explanation 1 & 2 has been inserted vide NTF. NO. 01/2014-CE (NT), DT. 08/01/2014)

(Above sub-rule (5C) has been inserted vide NTF. NO. 33/2007-CE(N.T.), DT. 07/09/2007)

(6) The amount paid under sub-rule (5) and sub-rule (5A) [OLD- sub-rule (5) ] shall be eligible as CENVAT credit as if it was a duty paid by the person who removed such goods under sub-rule (5) and sub-rule (5A) [OLD- sub-rule (5) ].

(In sub-rule (6), words, brackets and figure, "sub-rule (5) and sub-rule (5A)" has been substituted vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)

(7) Notwithstanding anything contained in sub-rule (1), sub-rule (1a) and sub-rule (4),-

(In above sub-rule (7) the words "sub-rule (1a)" has been inserted vide NTF. NO. 28/2016-CE (NT), DT. 26/05/2016  )

(a) CENVAT credit in respect of inputs or capital goods produced or manufactured, by a hundred per cent. export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or in a Software Technology Park other than a unit which pays excise duty levied under section 3 of the Excise Act read with serial numbers 3,5, 6 and 7 of notification No. 23/2003-Central Excise, dated the 31st March, 2003, [G.S.R. 266(E), dated the 31st March, 2003] and used in the manufacture of the final products or in providing an output service, in any other place in India, in case the unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification No. 23/2003-Central Excise, dated the 31st March, 2003, [G.S.R. 266(E), dated the 31st March, 2003], shall be admissible equivalent to the amount calculated in the following manner, namely:-

Fifty per cent. of [X multiplied by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent., of basic customs duty and additional duty of customs leviable on the inputs or the capital goods respectively and X denotes the assessable value.

Provided that the CENVAT credit in respect of inputs and capital goods cleared on or after 1st March, 2006 from an export oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such unit pays excise duty under section 3 of the Excise Act read with serial number 2 of the notification no. 23/2003-Central Excise dated 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003] shall be equal to X multiplied by [(1+BCD/200) multiplied by (CVD/100)] [OLD- X multiplied by {(1+BCD/400) multiplied by (CVD/100)} ].

Provided further that the CENVAT credit in respect of inputs and capital goods cleared on or after the 7th September, 2009 from an export-oriented undertaking or by a unit in Electronic Hardware Technology Park or in a Software Technology Park, as the case may be, on which such undertaking or unit has paid“

1. excise duty leviable under section 3 of the Excise Act read with serial number 2 of the notification no. 23/2003-Central Excise, dated 31st March, 2003 [G.S.R. 266(E), dated the 31st March, 2003]; and

2. the Education Cess leviable under section 91 read with section 93 of the Finance (No. 2) Act, 2004 and the Secondary and Higher Education Cess leviable under section 136 read with section 138 of the Finance Act, 2007, on the excise duty referred to in (A),

shall be the aggregate of -

I. that portion of excise duty referred to in (A), as is equivalent to -

i. the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, which is equal to the duty of excise under clause (a) of sub-section (1) of section 3 of the Excise Act;

ii. the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act; and

II. the Education Cess and the Secondary and Higher Education Cess referred to in (B)

(Above second proviso has been inserted vide NTF. NO. 22/2009-CE(N.T.), DT. 07/09/2009)

(Above clause (a), "X multiplied by [(1+BCD/200) multiplied by (CVD/100)]" has been substituted vide NTF. NO. 48/2008-CE(N.T.), DT. 05/12/2008)

(Above proviso has been inserted vide NTF. NO. 06/2006-CE(N.T.), DT. 20/03/2006)

(b) CENVAT credit in respect of -

(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978);

(ii) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);

(iii) the education cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);

(iiia) the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007);

(Clause (iiia) has been substituted vide NTF. NO. 27/2007-CE(N.T.), DT. 12/05/2007)

[OLD-
(iiia) the Secondary and Higher Education Cess on excisable goods leviable under clause (126) read with clause (128) of the Finance Bill, 2007, which by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), has the force of law;]

(Above sub-clause (iiia) has been inserted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

(iv) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under items (i), (ii) and (iii) above;

(v) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003);

(vi) the education cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004); and

(via) the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007); and

(Clause (via) has been inserted vide NTF. NO. 27/2007-CE(N.T.), DT. 12/05/2007)

(vii) the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005) [OLD- clause 85 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931, the force of law ], shall be utilised towards payment of duty of excise or as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), or the education cess on excisable goods leviable under section 91 read with section 93 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on excisable goods leviable under section 136 read with section 138 of the Finance Act, 2007 (22 of 2007) or the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003), or the education cess on taxable services leviable under section 91 read with section 95 of the said Finance (No.2) Act, 2004 (23 of 2004), or the Secondary and Higher Education Cess on taxable services leviable under section 136 read with section 140 of the Finance Act, 2007 (22 of 2007), or the additional duty of excise leviable under section 85 of the Finance Act, 2005 (18 of 2005) respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves, if such inputs are removed as such or after being partially processed or on any output service;

Provided that the credit of the education cess on excisable goods and the education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services:

Provided further that the credit of the Secondary and Higher Education Cess on excisable goods and the Secondary and Higher Education Cess on taxable services can be utilized, either for payment of the Secondary and Higher Education Cess on excisable goods or for the payment of the Secondary and Higher Education Cess on taxable services.

(Above para from "shall be utilised towards payment of duty " to "processed or on any output service" and provisos has been substituted vide NTF. NO. 27/2007-CE(N.T.), DT. 12/05/2007)

[OLD- shall be utilized only towards payment of duty of excise or as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), or the education cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004,or the Secondary and Higher Education Cess on excisable goods leviable under clause (126) read with clause (128) of the Finance Bill, 2007, which by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), has the force of law additional duty of excise leviable under section 157 of the Finance Act, 2003, or the education cess on taxable services leviable under section 91 read with section 95 of the said Finance (No.2) Act, 2004, or the additional duty of excise leviable under section 85 of Finance Act, 2005 (18 of 2005 ) [OLD- clause 85 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law ], respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves, if such inputs are removed as such or after being partially processed or on any output service:

(In above sub-clause (vii) the portion "or the Secondary and Higher Education Cess on excisable goods leviable under clause (126) read with clause (128) of the Finance Bill, 2007, which by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), has the force of law" has been inserted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

(In clause (b) the words, figures and bracke "section 85 of Finance Act, 2005 (18 of 2005 )" has been substituted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

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. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the factory of manufacture of final product in the financial year 2014-15 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act:

Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input services received by the manufacturer of final product on or after the 1st day of March, 2015 can be utilized for payment of the duty of excise specified in the First Schedule to the Excise Tariff Act.

(Above three proviso has been substituted vide NTF.  NO. 12/2015-CE (NT), DT. 30/04/2015 )

[OLD- Provided that the credit of the education cess on excisable goods and the secondary and higher education cess on excisable goods and education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or secondary and higher education cess on excisable goods or for the payment of education cess on taxable services.]

(Above proviso has been substituted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

[OLD-
Provided that the credit of the education cess on excisable goods and education cess on taxable services can be utilised, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services. ]]

Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on inputs or capital goods received in the premises of the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service:

Provided also that the credit of balance fifty per cent. Education Cess and Secondary and Higher Education Cess paid on capital goods received in the premises of the provider of output service in the financial year 2014-15 can be utilized for payment of service tax on any output service:

Provided also that the credit of Education Cess and Secondary and Higher Education Cess paid on input service in respect of which the invoice, bill, challan or Service Tax Certificate for Transportation of Goods by Rail (referred to in rule 9), as the case may be, is received by the provider of output service on or after the 1st day of June, 2015 can be utilized for payment of service tax on any output service.

(Above sixth to nineth proviso has been inserted vide NTF. NO. 22/2015-CE (NT), DT. 07/10/2015 )

Explanation.- For the removal of doubts, it is hereby declared that the credit of the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) paid on or after the 1st day of April, 2000, may be utilised towards payment of duty of excise leviable under the First Schedule or the Second Schedule to the Excise Tariff Act;

(Above Clause (b) has been substituted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

[OLD-
(b) CENVAT credit in respect of,-

(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978);

(ii) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001);

(iii) the Education Cess on excisable goods leviable under section 91 read with section 93 of the Finance (No.2) Act, 2004 (23 of 2004);

(iv) the additional duty leviable under section 3 of the Customs Tariff Act, equivalent to the duty of excise specified under clauses (i), (ii) and (iii);

(v) the additional duty of excise leviable under section 157 of the Finance Act, 2003 (32 of 2003); and

(vi) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No.2) Act, 2004 (23 of 2004),

shall be utilized only towards payment of duty of excise or, as the case may be, of service tax leviable under the said Additional Duties of Excise (Textiles and Textile Articles) Act, or the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001, the Education Cess on excisable goods leviable under section 91 read with section 93 of the said Finance (No.2) Act, 2004, the additional duty of excise leviable under section 157 of the said Finance Act, 2003, or the Education Cess on taxable services leviable under section 91 read with section 95 of the said Finance (No.2) Act, 2004, respectively, on any final products manufactured by the manufacturer or for payment of such duty on inputs themselves if such inputs are removed as such or after being partially processed or on any output service.

Provided that the credit of the Education Cess on excisable goods and the Education Cess on taxable services can be utilized either for payment of the Education Cess on excisable goods or for the payment of the Education Cess on taxable services.

Explanation.- For removal of doubts, it is hereby declared that the credit of the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) paid on or after the 1st day of April, 2000, may be utilized towards payment of duty of excise leviable under the First Schedule or the Second Schedule of the Excise Tariff Act; ]

(c) the CENVAT credit, in respect of additional duty leviable under section 3 of the Customs Tariff Act, paid on marble slabs or tiles falling under tariff items 25151220 and 25151290 respectively [OLD- sub-heading No. 2504.21 or 2504.31 respectively ] of the First Schedule to the Excise Tariff Act shall be allowed to the extent of thirty rupees per square meter;

(In above clauses (c) the words and figures "tariff items 25151220 and 25151290 respectively" has been substituted vide NTF. NO. 07/2007-CE(N.T.), DT. 21/02/2007)

Explanation.- Where the provisions of any other rule or notification provide for grant of whole or part exemption on condition of non-availability of credit of duty paid on any input or capital goods, or of service tax paid on input service, the provisions of such other rule or notification shall prevail over the provisions of these rules.

(d) Cenvat credit in respect of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016) shall be utilised only towards payment of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016);

(Above clause (d) has been inserted vide NTF. NO. 28/2016-CE (NT), DT. 26/05/2016  )

4. Conditions for allowing CENVAT credit.-

(1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service or in the premises of the job worker, in case goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service, as the case may be,:

(In above sub-rule 1 the words "or in the premises of the job worker, in case goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service, as the case may be," has been inserted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015)

Provided that in respect of final products, namely, articles of jewellery or other artic les of precious metals falling under heading 7113 or 7114as the case may be [OLD- jewellery falling under heading 7113 ] of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker.

(In above sub-clause (i) the words and figures "jewellery or other artic les of precious metals falling under heading 7113 or 7114as the case may be" has been substituted vide NTF. NO. 09/2011-CE (NT), DT. 24/03/2011)

(Above proviso has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

Provided further that the CENVAT credit in respect of inputs may be taken by the provider of output service when the inputs are delivered to such provider, subject to maintenance of documentary evidence of delivery and location of the inputs.

(Above second proviso has been inserted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after one year [OLD- six months ] of the date of issue of any of the documents specified in sub- rule (1) of rule 9.

(In above third proviso the words "one year" has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015)

(Above third proviso has been inserted vide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014)

(2) (a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service or outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory, or in the premises of the job worker, in case capital goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service, as the case may be, at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year:

(In above clause (a)  the words "or in the premises of the job worker, in case capital goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service, as the case may be," has been inserted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015)

(In above clause (a) thewords and letters "or outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory, " has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year.

Provided further that the CENVAT credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [OMITTED- as amended by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill under the Provisional Collection of Taxes Act, 1931, the force of law ], in respect of capital goods shall be allowed immediately on receipt of the capital goods in the factory of a manufacturer.

(In above proviso the portion beginning with the words and figure "as amended by clause 72" and ending with the words "the force of law," has been omitted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

(Above 2nd proviso has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year.

Provided also that the CENVAT credit in respect of capital goods may be taken by the provider of output service when the capital goods are delivered to such provider, subject to maintenance of documentary evidence of delivery and location of the capital goods.

(Above fourth proviso has been inserted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

Explanation. – For the removal of doubts, it is hereby clarified that-

(i) an assessee engaged in the manufacture of articles of jewellery or parts of articles of jewellery or both, falling under heading 7113 of the First Schedule of the Excise Tariff Act, shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees fifteen crore;

(Above item (i) has been substituted vide NTF. NO. 36/2016-CE (NT), DT. 26/07/2016 )

[OLD- (i) an assessee engaged in the manufacture of articles of jewellery, other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under chapter heading 7113 of the First Schedule of the Excise Tariff Act, shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees twelve crore; ]

(ii) an assessee, other than (a) above, shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees four hundred lakhs.

(Above Explanation has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  with effect from the 1st March, 2016)

[OLD- Explanation.- For the removal of doubts, it is hereby clarified that an assessee shall be “eligible� if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified in the said notification did not exceed rupees four hundred lakhs. ]

(Above 3rd proviso has been inserted vide NTF. NO. 06/2010-CE(N.T.), DT. 27/02/2010)

(b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 [OLD- heading No. 68.02 and sub-heading No. 6801.10 ] of the First Schedule to the Excise Tariff Act, are in the possession of the manufacturer of final products, or provider of output service in such subsequent years.

(In above clause (b) the words and figures "heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804" has been substituted vide NTF. NO. 07/2007-CE(N.T.), DT. 21/02/2007)

Illustration.- A manufacturer received machinery on the 16th day of April, 2002 in his factory. CENVAT of two lakh rupees is paid on this machinery. The manufacturer can take credit upto a maximum of one lakh rupees in the financial year 2002-2003, and the balance in subsequent years..

(3) The CENVAT credit in respect of the capital goods shall be allowed to a manufacturer, provider of output service even if the capital goods are acquired by him on lease, hire purchase or loan agreement, from a financing company.

(4) The CENVAT credit in respect of capital goods shall not be allowed in respect of that part of the value of capital goods which represents the amount of duty on such capital goods, which the manufacturer or provider of output service claims as depreciation under section 32 of the Income-tax Act, 1961( 43 of 1961).

(5) (a) (i) The CENVAT credit on inputs shall be allowed even if any inputs as such or after being partially processed are sent to a job worker and from there subsequently sent to another job worker and likewise, for further processing, testing, repairing, re-conditioning or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or the provider of output service taking the CENVAT credit that the inputs or the products produced therefrom are received back by the manufacturer or the provider of output service, as the case may be, within one hundred and eighty days of their being sent from the factory or premises of the provider of output service, as the case may be:

Provided that credit shall also be allowed even if any inputs are directly sent to a job worker without their being first brought to the premises of the manufacturer or the provider of output service, as the case may be, and in such a case, the period of one hundred and eighty days shall be counted from the date of receipt of the inputs by the job worker;

(ii) the CENVAT credit on capital goods shall be allowed even if any capital goods as such are sent to a job worker for further processing, testing, repair, re-conditioning or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or the provider of output service taking the CENVAT credit that the capital goods are received back by the manufacturer or the provider of output service, as the case may be, within two years of their being so sent:

Provided that credit shall be allowed even if any capital goods are directly sent to a job worker without their being first brought to the premises of the manufacturer or the provider of output service, as the case may be, and in such a case, the period of two years shall be counted from the date of receipt of the capital goods by the job worker;

(iii) if the inputs or capital goods, as the case may be, are not received back within the time specified under sub-clause (i) or (ii), as the case may be, by the manufacturer or the provider of output service, the manufacturer or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods, as the case may be, by debiting the CENVAT credit or otherwise, but the manufacturer or the provider of output service may take the CENVAT credit again when the inputs or capital goods, as the case may be, are received back in the factory or in the premises of the provider of output service.

(In above clause (a)  has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015)

[OLD- (a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service ]

(In clause (a), words ",or for the manufacture of intermediate goods necessary for the manufacture of final products" has been inserted vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)

(b) The CENVAT credit shall also be allowed to a manufacturer of final products in respect of jigs, fixtures, moulds and dies or tools falling under Chapter 82 of the First Schedule to the Excise Tariff Act, sent by such manufacturer to, -

(i) another manufacturer for the production of goods; or

(ii) a job worker for the production of goods on his behalf, according to his specifications:

Provided that such credit shall also be allowed where jigs, fixtures, moulds and dies or tools falling under Chapter 82 of the First Schedule to the Excise Tariff Act, are sent by the manufacturer of final products to the premises of another manufacturer or job worker without bringing these to his own premises.

(Above clause (b) has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  )

[OLD- (b) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to,-

(i) another manufacturer for the production of goods; or

(ii) a job worker for the production of goods on his behalf, according to his specifications.]

(Above clause (b) has been substituted vide NTF. NO. 06/2010-CE(N.T.), DT. 27/02/2010)

[OLD-
(b) The CENVAT credit shall also be allowed in respect of jigs, fixtures, moulds and dies sent by a manufacturer of final products to a job worker for the production of goods on his behalf and according to his specifications.]

(6) The Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, [OLD- Commissioner of Central Excise ] having jurisdiction over the factory of the manufacturer of the final products who has sent the input or partially processed inputs outside his factory to a job-worker may, by an order, which shall be valid for three financial years [OLD- valid for a financial year], in respect of removal of such input or partially processed input, and subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid, allow final products to be cleared from the premises of the job-worker.

(In above sub-rule (6) the words "valid for three financial years" has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  )

(In sub-rule (6), words "Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be," has been substituted vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)

(7) The CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 is received:

Provided that in respect of input service where whole or part of the service tax is liable to be paid by the recipient of service, credit of service tax payable by the service recipient shall be allowed after such service tax is paid:

Provided further that in case the payment of the value of input service and the service tax paid or payable as indicated in the invoice, bill or, as the case may be, challan referred to in rule 9 is not made within three months of the date of the invoice, bill or, as the case may be, challan, the manufacturer or the service provider who has taken credit on such input service, shall pay an amount equal to the CENVAT credit availed on such input service, except an amount equal to the CENVAT credit of the tax that is paid by the manufacturer or the service provider as recipient of service, and in case the said payment is made, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules:

(Above provisos has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 wef 01/04/2015)

Provided also that in respect of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services, credit of service tax paid by the person liable for paying service tax shall be allowed after such service tax is paid:

(Above proviso has been inserted  vide NTF. NO. 10/2017-CE (NT), DT. 13/04/2017 )

[OLD- Provided that in respect of input service where whole of the service tax is liable to be paid by the recipient of service, credit shall be allowed after the service tax is paid:

Provided further that in respect of an input service, where the service recipient is liable to pay a part of service tax and the service provider is liable to pay the remaining part, the CENVAT credit in respect of such input service shall be allowed on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in rule 9:

Provided also that in case the payment of the value of input service and the service tax paid or payable as indicated in the invoice, bill or, as the case may be, challan referred to in rule 9, except in respect of input service where the whole of the service tax is liable to be paid by the recipient of service, is not made within three months of the date of the invoice, bill or, as the case may be, challan, the manufacturer or the service provider who has taken credit on such input service, shall pay an amount equal to the CENVAT credit availed on such input service and in case the said payment is made, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules :]

(Above provisos has been substituted vide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014)

[OLD- Provided that in case of an input service where the service tax is paid on reverse charge by the recipient of the service, the CENVAT credit in respect of such input service shall be allowed on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in rule 9:

Provided further that in case the payment of the value of input service and the service tax paid or payable as indicated in the invoice, bill or, as the case may be, challan referred to in rule 9, is not made within three months of the date of the invoice, bill or, as the case may be, challan, the manufacturer or the service provider who has taken credit on such input service, shall pay an amount equal to the CENVAT credit availed on such input service and in case the said payment is made, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules: ]

Provided also that if any payment or part thereof, made towards an input service is refunded or a credit note is received by the manufacturer or the service provider who has taken credit on such input service, he shall pay an amount equal to the CENVAT credit availed in respect of the amount so refunded or credited:

Provided also that CENVAT credit in respect of an invoice, bill or, as the case may be, challan referred to in rule 9, issued before the 1st day of April, 2011 shall be allowed, on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in rule 9.

Provided also that the manufacturer or the provider of output service shall not take CENVAT credit after one year  [OLD- six months ] of the date of issue of any of the documents specified in sub-rule (1) of rule 9  except in case of services provided by Government, local authority or any other person, by way of assignment of right to use any natural resource .

(In above 5 th proviso the words "except in case of services provided by Government, local authority or any other person, by way of assignment of right to use any natural resource" has been inserted vide NTF. NO. 24/2016-CE (NT), DT. 13/04/2016 )

(In above fifth proviso the words "one year" has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(Above fifth provisos has been inserted vide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014 WEF 01/09/2014)

Provided also that CENVAT Credit of Service Tax paid in a financial year, on the onetime charges payable in full upfront or in instalments, for the service of assignment of the right to use any natural resource by the Government, local authority or any other person, shall be spread evenly over a period of three years:

Provided also that where the manufacturer of goods or provider of output service, as the case may be, further assigns such right assigned to him by the Government or any other person, in any financial year, to another person against consideration, such amount of balance CENVAT credit as does not exceed the service tax payable on the consideration charged by him for such further assignment, shall be allowed in the same financial year.

(Above 6th & 7th provisos substituted vide NTF. NO. 24/2016-CE (NT), DT. 13/04/2016 )

[OLD- Provided also that CENVAT Credit of Service Tax paid on the charges paid or payable for the service provided by way of assignment, by the Government or any other person, of the right to use any natural resource, shall be spread over such period of time as the period for which the right to use has been assigned. CENVAT Credit in the financial year in which the right to use is acquired and in the subsequent years during which such right is retained by the manufacturer of goods or provider of output service as the case may be, shall be taken of an amount determined as per the following formula:

Amount of CENVAT Credit that shall be taken in a financial year = Service Tax paid on the charges payable for the assignment of the right to use / No. of Years for which the rights have been assigned Provided also that where the manufacturer of goods or provider of output service, as the case may be, further assigns such right to use assigned to him by the Government or any other person, in any financial year, to another person against a consideration, such amount of balance CENVAT credit as does not exceed the service tax payable on the consideration charged by him for such further assignment, shall be allowed in the same financial year:

Provided also that CENVAT credit of annual or monthly user charges payable in respect of any service by way of assignment of right to use natural resources shall be allowed in the same financial year in which they are paid.]

(Above 6th & 7th provisos has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  )

Provided also that unavailed CENVAT Credit in respect of services provided by the Government, local authority or any other person by way of assignment of the right to use any natural resource on the day immediately preceding the appointed day may be availed of in full on that very day.

(Above 9th proviso has been inserted vide NTF. NO. 15/2017-CE (NT), DT. 12/06/2017 )

Explanation I.- The amount mentioned in this rule [OLD- sub-rule], unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March.

Explanation II. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under this rule [OLD- sub-rule], it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken.

(In above Explanations I and II, for the words “rule” has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

Explanation III.- In case of a manufacturer who avails the exemption under a notification based on the value of clearances in a financial year and a service provider who is an individual or proprietary firm or partnership firm, the expressions, “following month” and “month of March” occurring in sub-rule (7) shall be read respectively as “following quarter” and “quarter ending with the month of March”

(Above sub-rule (7) has been substituted vide NTF. NO. 13/2011-CE (NT), DT. 31/03/2011)

Explanation IV.- "unavailed CENVAT credit" means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of any service from the aggregate amount of CENVAT credit to which the recipient of such service was entitled to in respect of such service.

Explanation V. - “appointed day” means the date on which the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017) shall come into force’.

(Above Explanation IV & V has been inserted vide NTF. NO. 15/2017-CE (NT), DT. 12/06/2017 )

[OLD-
(7) The CENVAT credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9.

Provided that if any payment or part thereof, made towards an input service is returned, the manufacturer or the service provider who has taken credit on such input service, shall pay an amount proportionate to the CENVAT credit availed in respect of the amount so returned.

Explanation I.- The amount mentioned in this sub-rule, unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March.

Explanation II. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under this sub-rule, it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken.

Explanation III.- In case of a manufacturer who avails the exemption under a notification based on the value of clearances in a financial year and a service provider who is an individual or proprietary firm or partnership firm, the expressions, "following month" and "month of March" occurring in sub-rule (7) shall be read respectively as "following quarter" and "quarter ending with the month of March".]

(In above sub-rule (7) the bold portion has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

5. Refund of CENVAT Credit. -

(1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette:
 

Refund amount =

(Export turnover of goods+ Export turnover of services) Total turnover

X Net CENVAT credit

Where,-

(A) "Refund amount"means the maximum refund that is admissible;

(B) "Net CENVAT credit"means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider

reduced by the amount reversed in terms of sub-rule (5C) of rule 3, during the relevant period;

(C) "Export turnover of goods"means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking;

(D) "Export turnover of services"means the value of the export service calculated in the following manner, namely:-

Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period-advances received for export services for which the provision of service has not been completed during the relevant period;

(E) "Total turnover"means sum total of the value of -

(a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported;

(b) export turnover of services determined in terms of clause (D) of sub-rule (1) above and the value of all other services, during the relevant period; and

(c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed.

(2) This rule shall apply to exports made on or after the 1st April, 2012:

Provided that the refund may be claimed under this rule, as existing, prior to the commencement of the CENVAT Credit (Third Amendment) Rules, 2012, within a period of one year from such commencement:

Provided further that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Service Tax Rules, 1994 [OLD- Export of Services Rules, 2005 ] in respect of such tax.

(In above second proviso the word "Service Tax Rules, 1994" been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

Explanation 1.- For the purposes of this rule,-

(1) "export service"means a service which is provided as per rule 6A of the Service Tax Rules 1994 [OLD- the provisions of Export of Services Rules, 2005, whether the payment is received or not];

(1A) "export goods" means any goods which are to be taken out of India to a place outside India.

(Above clause (1A) has been inserted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(2) "relevant period"means the period for which the claim is filed.

(In above Explanation 1, the word "rule 6A of the Service Tax Rules 1994" been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

Explanation 2.-For the purposes of this rule, the value of services, shall be determined in the same manner as the value for the purposes of sub-rule (3) and (3A) of rule 6 is determined.

(Above Rule 5 has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

[OLD-

5. Refund of CENVAT credit, -

Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,

(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or

(ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:

Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.

Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilised for payment of service tax on any output service.

Explanation: For the purposes of this rule, the words output service which is exported means the output service exported in accordance with the Export of Services Rules, 2005.]

(Above rule 5 has been amended vide NTF. NO. 04/2006-CE(N.T.), DT. 14/03/2006)

[OLD5. Refund of CENVAT credit.-

Where any input or input service is used in the final products which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate products cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,

(i) duty of excise on any final products cleared for home consumption or for export on payment of duty; or

(ii) service tax on output service,

and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:

Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty.

Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, [OMITTED- as amended by clause 72 of the Finance Bill, 2005, the clause which has, by virtue of the declaration made in the said Finance Bill, under the Provisional Collection of Taxes Act, 1931, the force of law ], shall be utilised for payment of service tax on any output service.

(In above proviso the portion beginning with the words and figure "as amended by clause 72" and ending with the words "the force of law," has been omitted vide NTF. NO. 22/2005-CE(N.T.), DT. 13/05/2005)

(Above 2nd proviso has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

Explanation.- For the purposes of this rule, the words “output service which is exported� means the output taxable services exported in accordance with the Export of Services Rules, 2005.]

(Explanation has been substituted vide NTF. NO. 16/2005-CE(N.T.), DT. 03/03/2005)

[OLD-
Explanation: For the purposes of this rule, the words "output service which are exported" means any output service in respect of which payment is received in India in convertible foreign exchange and the same is not repatriated from, or sent outside, India.]

5A. Refund of CENVAT credit to units in specified areas.- Notwithstanding anything contrary contained in these rules, where a manufacturer has cleared final products in terms of notification of the Government of India in the Ministry of Finance (Department of Revenue) No.20/2007-Central Excise, dated the 25th April, 2007 and is unable to utilize the CENVAT credit of duty taken on inputs required for manufacture of final products specified in the said notification, other than final products which are exempt or subject to nil rate of duty, for payment of duties of excise on said final products, then the Central Government may allow the refund of such credit subject to such procedure, conditions and limitations, as may be specified by notification.

Explanation: For the purposes of this rule, “duty� means the duties specified in sub-rule (1) of rule 3 of these rules.

(Above rule 5A has been inserted vide NTF. NO. 24/2007-CE(N.T.), DT. 25/04/2007)

5B. Refund of CENVAT credit to service providers providing services taxed on reverse charge basis.-

A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette.

(Rule 5B has been inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

6. Obligation of a manufacturer or producer of final products and a provider of output service [OLD- provider of taxable service ]

(In above marginal heading at Rule 6 the words "provider of output service" has been substitutid vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD - Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services.-]

(Above marginal heading at rule 6 has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

(1) The CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services and the credit not allowed shall be calculated and paid by the manufacturer or the provider of output service, in terms of the provisions of sub-rule (2) or sub-rule (3), as the case may be :

Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.

Explanation 1.- For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include nonexcisable goods cleared for a consideration from the factory.

Explanation 2.- Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made there under.

Explanation 3. – For the purposes of this rule, exempted services as defined in clause (e) of rule 2 shall include an activity, which is not a ‗service‘ as defined in section 65B(44) of the Finance Act, 1994 provided that such activity has used inputs or input services.

(In above Explanation 3 the words "provided that such activity has used inputs or input services" inserted  vide NTF. NO. 24/2016-CE (NT), DT. 13/04/2016 )

Explanation 4. – Value of such an activity as specified above in Explanation 3, shall be the invoice/agreement/contract value and where such value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Finance Act, 1994 and the rules made thereunder.

(2) A manufacturer who exclusively manufactures exempted goods for their clearance upto the place of removal or a service provider who exclusively provides exempted services shall pay the whole amount of credit of input and input services and shall, in effect, not be eligible for credit of any inputs and input services.

(3) (a) A manufacturer who manufactures two classes of goods, namely :-

(i) non-exempted goods removed;

(ii) exempted goods removed;

or

(b) a provider of output service who provides two classes of services, namely:-

(i) non-exempted services;

(ii) exempted services,

shall follow any one of the following options applicable to him, namely :-

(i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services subject to a maximum of the sum total of opening balance of the credit of input and input services available at the beginning of the period to which the payment relates and the credit of input and input services taken during that period; or

(Above clause (i) has been substituted vide NTF. NO. 23/2016-CE (NT), DT. 01/04/2016 )

[OLD- (i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services subject to a maximum of the total credit available in the account of the assessee at the end of the period to which the payment relates; or]

(ii) pay an amount as determined under sub-rule (3A):

Provided that if any duty of excise is paid on the exempted goods, the same shall be reduced from the amount payable under clause (i) :

Provided further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be seven per cent. of the value so exempted :

Provided also that in case of transportation of goods or passengers by rail, the amount required to be paid under clause (i) shall be an amount equal to two per cent. of value of the exempted services.

Explanation 1.- If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year.

Explanation 2.- No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services.

Explanation 3.- For the purposes of this sub-rule and sub-rule(3A),-

(a) "non-exempted goods removed" means the final products excluding exempted goods manufactured and cleared upto the place of removal;

(b) "exempted goods removed" means the exempted goods manufactured and cleared upto the place of removal;

(c) "non-exempted services" means the output services excluding exempted services.

(3A) For determination of amount required to be paid under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:-

(a) the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely :-

(i) name, address and registration number of the manufacturer of goods or provider of output service;

(ii) date from which the option under this clause is exercised or proposed to be exercised;

(iii) description of inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services and description of such exempted goods removed and such exempted services provided;

(iv) description of inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services and description of such non-exempted goods removed and non-exempted services provided ;

(v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition;

(b) the manufacturer of final products or the provider of output service shall determine the credit required to be paid, out of this total credit of inputs and input services taken during the month, denoted as T, in the following sequential steps and provisionally pay every month, the amounts determined under sub-clauses (i) and (iv), namely:-

(i) the amount of CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services shall be called ineligible credit, denoted as A, and shall be paid;

(ii) the amount of CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services shall be called eligible credit, denoted as B, and shall not be required to be paid;

(iii) credit left after attribution of credit under sub-clauses (i) and (ii) shall be called common credit, denoted as C and calculated as,-

C = T – (A + B);

Explanation.- Where the entire credit has been attributed under sub-clauses (i) and (ii), namely ineligible credit or eligible credit, there shall be left no common credit for further attribution.

(iv) the amount of common credit attributable towards exempted goods removed or for provision of exempted services shall be called ineligible common credit, denoted as D and calculated as follows and shall be paid, -

D = (E/F) x C;

where E is the sum total of –

(a) value of exempted services provided; and

(b) value of exempted goods removed, during the preceding financial year; where F is the sum total of-

(a) value of non-exempted services provided,

(b) value of exempted services provided,

(c) value of non-exempted goods removed, and

(d) value of exempted goods removed, during the preceding financial year:

Provided that where no final products were manufactured or no output service was provided in the preceding financial year, the CENVAT credit attributable to ineligible common credit shall be deemed to be fifty per cent. of the common credit;

(v) remainder of the common credit shall be called eligible common credit and denoted as G, where,-

G = C - D;

Explanation.- For the removal of doubts, it is hereby declared that out of the total credit T, which is sum total of A, B, D, and G, the manufacturer or the provider of the output service shall be able to attribute provisionally and retain credit of B and G, namely, eligible credit and eligible common credit and shall provisionally pay the amount of credit of A and D, namely, ineligible credit and ineligible common credit.

(vi) where manufacturer or the provider of the output service fails to pay the amount determined under subclause (i) or sub-clause (iv), he shall be liable to pay the interest from the due date of payment till the date of payment of such amount, at the rate of fifteen per cent. per annum;

(c) the manufacturer or the provider of output service shall determine the amount of CENVAT credit attributable to exempted goods removed and provision of exempted services for the whole of financial year, out of the total credit denoted as T (Annual) taken during the whole of financial year in the following manner, namely :-

(i) the CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of exempted goods removed or for provision of exempted services on the basis of inputs and input services actually so used during the financial year, shall be called Annual ineligible credit and denoted as A(Annual);

(ii) the CENVAT credit attributable to inputs and input services used exclusively in or in relation to the manufacture of non-exempted goods removed or for the provision of non-exempted services on the basis of inputs and input services actually so used shall be called Annual eligible credit and denoted as B(Annual);

(iii) common credit left for further attribution shall be denoted as C(Annual) and calculated as, -

C(Annual) = T(Annual) – [A(Annual) + B(Annual)];

(iv) common credit attributable towards exempted goods removed or for provision of exempted services shall be called Annual ineligible common credit, denoted by D(Annual) and shall be calculated as, -

D(Annual) = (H/I) x C(Annual);

where H is sum total of-

(a)value of exempted services provided; and

(b) value of exempted goods removed;

during the financial year ;

where I is sum total of -

(a) value of non-exempted services provided,

(b) value of exempted services provided,

(c) value of non-exempted goods removed; and

(d) value of exempted goods removed;

during the financial year;

(d) the manufacturer or the provider of output service shall pay on or before the 30th June of the succeeding financial year, an amount equal to difference between the total of the amount of Annual ineligible credit and Annual ineligible common credit and the aggregate amount of ineligible credit and ineligible common credit for the period of whole year, namely, [{A(Annual) + D(Annual)} – {(A+D) aggregated for the whole year)}], where the former of the two amounts is greater than the later;

(e) where the amount under clause (d) is not paid by the 30th June of the succeeding financial year, the manufacturer of goods or the provider of output service, shall, in addition to the amount of credit so paid under clause (d), be liable to pay on such amount an interest at the rate of fifteen per cent. per annum, from the 30th June of the succeeding financial year till the date of payment of such amount;

(f) the manufacturer or the provider of output service, shall at the end of the financial year, take credit of amount equal to difference between the total of the amount of the aggregate of ineligible credit and ineligible common credit paid during the whole year and the total of the amount of annual ineligible credit and annual ineligible common credit, namely, [{(A+D) aggregated for the whole year)} – {A(Annual) + D(Annual)}], where the former of the two amounts is greater than the later;

(g) the manufacturer of the goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of payment or adjustment, as per the provisions of clauses (d), (e) and (f) ,the following particulars, namely :-

(i) details of credit attributed towards eligible credit, ineligible credit, eligible common credit and ineligible common credit, month-wise, for the whole financial year, determined as per the provisions of clause (b);

(ii) CENVAT credit annually attributed to eligible credit, ineligible credit, eligible common credit and ineligible common credit for the whole of financial year, determined as per the provisions of clause (c);

(iii) amount determined and paid as per the provisions of clause (d), if any, with the date of payment of the amount;

(iv) interest payable and paid, if any, determined as per the provisions of clause (e); and

(v) credit determined and taken as per the provisions of clause (f), if any, with the date of taking the credit.

(3AA) Where a manufacturer or a provider of output service has failed to exercise the option under sub-rule (3) and follow the procedure provided under sub-rule (3A), the Central Excise Officer competent to adjudicate a case based on amount of CENVAT credit involved, may allow such manufacturer or provider of output service to follow the procedure and pay the amount referred to in clause (ii) of sub-rule (3), calculated for each of the months, mutatismutandis in terms of clause (c) of sub-rule (3A), with interest calculated at the rate of fifteen per cent. per annum from the due date for payment of amount for each of the month, till the date of payment thereof.

(3AB) Assessee who has opted to pay an amount under clause (ii) or clause (iii) of sub-rule (3) in the financial year 2015-16, shall pay the amount along with interest or take credit for the said financial year in terms of clauses ( c), (d), (e), (f), (g), (h) or (i) of sub-rule (3A), as they prevail on the day of publication of this notification and for this purpose these provisions shall be deemed to be in existence till the 30th June, 2016.

(Above sub-rule (1)  to sub-rule (3A) has been substiuted & sub-rule (3AA) & (3AB) added vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  )

[OLD- (1) The CENVAT credit shall not be allowed on such quantity of input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services  [OLD- input or input service which is used in the manufacture of exempted goods or for provision of exempted services] [OLD- exempted goods or exempted services ], except in the circumstances mentioned in sub-rule (2).

(In above sub-rule (1) the words "input used in or in relation...............................exempted services" has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.

(Above 2nd proviso has been inserted vide NTF. NO. 13/2005-CE(N.T.), DT. 01/03/2005)

Explanation 1. – For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory.

Explanation 2. – Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder.

(Above Explanation 1 & 2 has been inserted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for-

(a) the receipt, consumption and inventory of inputs used-

(i) in or in relation to the manufacture of exempted goods;

(ii) in or in relation to the manufacture of dutiable final products excluding exempted goods;

(iii) for the provision of exempted services;

(iv) for the provision of output services excluding exempted services; and

(b) the receipt and use of input services-

(i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal;

(ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance upto the place of removal;

(iii) for the provision of exempted services; and

(iv) for the provision of output services excluding exempted services,

and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b).�;

(Above sub-rule (2) has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

[OLD-
(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, [OMITTED- except inputs intended to be used as fuel, ] and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. ]

(In sub-rule (2), the words "except inputs intended to be used as fuel," has been omitted vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)

(3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow  any one [OLD- either ] of the following options, as applicable to him, namely:-

(i) pay an amount equal to six per cent. [OLD-  five per cent.] of value of the exempted goods and seven per cent. of value of the exempted services; or

(In above clause (i) the words "seven per cent. of value of the" has been inserted vide NTF. NO. 14/2015-CE (NT), DT. 19/05/2015)

(In above clause (i) the words "six per cent." been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

(ii) pay an amount as determined under sub-rule (3A); or

(iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in clause (a) of sub-rule (2), take CENVAT credit only on inputs under subclauses

(ii) and (iv) of said clause (a) and pay an amount as determined under sub-rule (3A) in respect of input services. The provisions of sub-clauses (i) and (ii) of clause (b) and subclauses (i) and (ii) of clause (c) of sub-rule (3A) shall not apply for such payment:

Provided that if any duty of excise is paid on the exempted goods, the same shall be reduced from the amount payable under clause (i):

Provided further that if any part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services, used for providing such taxable service, shall be taken then the amount specified in clause (i) shall be seven [OLD- six ] per cent. [OLD-  five per cent.]  of the value so exempted.

(In above second proviso the words "seven" has been substituted vide NTF. NO. 14/2015-CE (NT), DT. 19/05/2015)

(In above second proviso the words "six per cent." been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

Provided that in case of transportation of goods or passengers by rail the amount required to be paid under clause (i) shall be an amount equal to 2 per cent. of value of the exempted services.

(Above third proviso has been inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(In above sub-rule (3) the word "any one" & clauses (i) & (ii) has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

[OLD-

(i) the manufacturer of goods shall pay an amount equal to five per cent. of value of the exempted goods and the provider of output service shall pay an amount equal to six per cent. of value of the exempted services; or.

(Above clause (i) has been substituted vide NTF. NO. 16/2009-CE(N.T.), DT. 07/07/2009)

[OLD-
(i) the manufacturer of goods shall pay an amount equal to ten per cent. of value of the exempted goods and the provider of output service shall pay an amount equal to eight per cent. of value of the exempted services; or ]

(ii) the manufacturer of goods or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A).

Explanation I.- If the manufacturer of goods or the provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year.
 

Explanation II.- For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs used exclusively in or in relation to the manufacture of exempted goods or for provision of exempted services and on input services used exclusively in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services.

Explanation III. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services.

(Above Explanation II has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

[OLD-
Explanation II.-For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service. ] ]

(3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:-

(a) while exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely:-

(i) name, address and registration No. of the manufacturer of goods or provider of output service;

(ii) date from which the option under this clause is exercised or proposed to be exercised;

(iii) description of dutiable goods or output [OLD- taxable ] services;

(iv) description of exempted goods or exempted services;

(v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition;

(b) the manufacturer of goods or the provider of output service shall, determine and pay, provisionally, for every month,-

(i) the amount equivalent to CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, denoted as A;

(ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional)= (B/C) multiplied by D, where B denotes the total value of exempted services provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of output [OLD- taxable ] services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A;

(iii) the amount attributable to input services used in or in relation to manufacture of exempted goods and their clearance up to the place of removal or provision of exempted services (provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of output [OLD- taxable ] and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT credit taken on input services during the month;

(In sub-clause (iii) the words "and their clearance up to the place of removal" has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

(c) the manufacturer of goods or the provider of output service, shall determine finally the amount of CENVAT credit attributable to exempted goods and exempted services for the whole financial year in the following manner, namely:-

(i) the amount of CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, on the basis of total quantity of inputs used in or in relation to manufacture of said exempted goods, denoted as H;

(ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services = (J/K) multiplied by L, where J denotes the total value of exempted services provided during the financial year, K denotes the total value of dutiable goods manufactured and removed plus the total value of output [OLD- taxable ] services provided plus the total value of exempted services provided, during the financial year and L denotes total CENVAT credit taken on inputs during the financial year minus H;

(iii) the amount attributable to input services used in or in relation to manufacture of exempted goods and their clearance up to the place of removal or provision of exempted services = (M/N) multiplied by P, where L denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the financial year, M denotes total value of output [OLD- taxable ] and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the financial year, and N denotes total CENVAT credit taken on input services during the financial year;

(In sub-clause (iii) the words "and their clearance up to the place of removal" has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

(d) the manufacturer of goods or the provider of output service, shall pay an amount equal to the difference between the aggregate amount determined as per condition (c) and the aggregate amount determined and paid as per condition (b), on or before the 30th June of the succeeding financial year, where the amount determined as per condition (c) is more than the amount paid;

(e) the manufacturer of goods or the provider of output service, shall, in addition to the amount short-paid, be liable to pay interest at the rate of twenty-four per cent. per annum from the due date, i.e., 30th June till the date of payment, where the amount short-paid is not paid within the said due date;

(f) where the amount determined as per condition (c) is less than the amount determined and paid as per condition (b), the said manufacturer of goods or the provider of output service may adjust the excess amount on his own, by taking credit of such amount;

(g) the manufacturer of goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of payment or adjustment, as per condition (d) and (f) respectively, the following particulars, namely:-
 

(i) details of CENVAT credit attributable to exempted goods and exempted services, monthwise, for the whole financial year, determined provisionally as per condition (b),

(ii) CENVAT credit attributable to exempted goods and exempted services for the whole financial year, determined as per condition (c),

(iii) amount short paid determined as per condition (d), alongwith the date of payment of the amount short-paid,

(iv) interest payable and paid, if any, on the amount short-paid, determined as per condition (e), and

(v) credit taken on account of excess payment, if any, determined as per condition (f);

(h) where the amount equivalent to CENVAT credit attributable to exempted goods or exempted services cannot be determined provisionally, as prescribed in condition (b), due to reasons that no dutiable goods were manufactured and no output [OLD- taxable ] service was provided in the preceding financial year, then the manufacturer of goods or the provider of output service is not required to determine and pay such amount provisionally for each month, but shall determine the CENVAT credit attributable to exempted goods or exempted services for the whole year as prescribed in condition (c) and pay the amount so calculated on or before 30th June of the succeeding financial year.

(In above clause (a) (b) (c) & (h) the words "output" has been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(i) where the amount determined under condition (h) is not paid within the said due date, i.e., the 30th June, the manufacturer of goods or the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty four per cent. per annum from the due date till the date of payment.

[OMITTED -
Explanation I.- “Value� for the purpose of sub-rules (3) and (3A) shall have the same meaning assigned to it under section 67 of the Finance Act, 1994 read with rules made thereunder or, as the case may be, the value determined under section 4 or 4A of the Central Excise Act, 1944 read with rules made thereunder.

Explanation II.-The amount mentioned in sub-rules (3) and (3A), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March.

Explanation III.- If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (3) or as the case may be sub-rule (3A), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken. ]

(Explanation I TO III has been OMITTED vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

(In sub-rule (1) the words "exempted goods or for provision of exempted services" & sub-rule (3) has been substituted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008)]

[OLD-
(3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or the provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely:-

(a) if the exempted goods are-

(i) goods falling within heading 2207 [OLD- heading No. 22.04 ] of the First Schedule to the Excise Tariff Act (hereinafter in this rule referred to as the said First Schedule);

(In above item (i) the words and figures "heading 2207" has been substituted vide NTF. NO. 07/2007-CE(N.T.), DT. 21/02/2007)

(ii) Low Sulphur Heavy Stock (LSHS) falling within Chapter 27 of the said First Schedule used in the generation of electricity;

(iii) Naphtha (RN) falling within Chapter 27 of the said First Schedule used in the manufacture of fertilizer;

(iv) Naptha (RN) and furnace oil falling within Chapter 27 of the said First Schedule used for generation of electricity;

(v) newsprint, in rolls, sheets or reels, falling within Chapter 48 [OLD- newsprint, in rolls or sheets, falling within heading No.48.01 ] of the said First Schedule;

(In above item (v) the words and figures "newsprint, in rolls, sheets or reels, falling within Chapter 48" has been substituted vide NTF. NO. 07/2007-CE(N.T.), DT. 21/02/2007)

(vi) final products falling within Chapters 50 to 63 of the said First Schedule,

(vii) goods supplied to defence personnel or for defence projects or to the Ministry of Defence for official purposes, under any of the following notifications of the Government of India in the Ministry of Finance (Department of Revenue), namely:-

(1) No. 70/92-Central Excise, dated the 17th June, 1992, G.S.R. 595 (E), dated the 17th June, 1992;

(2) No. 62/95-Central Excise, dated the 16th March, 1995, G.S.R. 254 (E), dated the 16th March, 1995;

(3) No. 63/95-Central Excise, dated the 16th March, 1995, G.S.R. 255 (E), dated the 16th March, 1995;

(4) No. 64/95-Central Excise, dated the 16th March, 1995, G.S.R. 256 (E), dated the 16th March, 1995,

the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of such final products at the time of their clearance from the factory; or

(viii) Liquefied Petroleum Gases (LPG) falling under tariff items 2711 12 00, 2711 13 00 and 2711 19 00 of the said First Schedule;

(Sub-clause (viii) has been substituted vide NTF. NO. 20/2005-CE(N.T.), DT. 02/05/2005)

[OLD-
(viii) Liquefied Petroleum Gases (LPG) falling within tariff item 2711 19 00 of the said First Schedule, for supply to household domestic consumers;]

(ix) Kerosene falling within heading 2710 of the said First Schedule, for ultimate sale through public distribution system.

(Sub-clause (viii) & (ix) has been inserted vide NTF. NO. 18/2005-CE(N.T.), DT. 12/04/2005)

(b) if the exempted goods are other than those described in condition (a), the manufacturer shall pay an amount equal to ten per cent. of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory;

(c) the provider of output service shall utilize credit only to extent of an amount not exceeding twenty per cent. of the amount of service tax payable on taxable output service.

Explanation I.- The amount mentioned in conditions (a) and (b) shall be paid by the manufacturer or provider of output service by debiting the CENVAT credit or otherwise.

Explanation II.- If the manufacturer or provider of output service fails to pay the said amount, it shall be recovered along with interest in the same manner, as provided in rule 14, for recovery of CENVAT credit wrongly taken.

(d) notwithstanding anything contained in condition (c), the provider of output service referred to in sub-clause (d) of clause (105) of section 65 of the Finance Act has the option to utilise CENVAT credit attributable to inputs and input services used in providing taxable services subject to the following, namely:-

(i) while exercising the option under this condition, the provider of output service shall intimate his option in writing to the Superintendent of Central Excise giving the following particulars, namely:-
 

(a) name and address of the provider of output service;

(b) date from which the option under this clause is exercised or proposed to be exercised;

(c) description of taxable services;

(d) description of exempted services;

(e) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition;

(ii) the option given under part (i) for a financial year shall not be withdrawn during the remaining part of the financial year;

(iii) the provider of output service shall,-
 

(a) determine, provisionally, the amount equivalent to CENVAT credit attributable to exempted services, in the following manner, namely:-

CENVAT credit attributable to exempted services (provisional) = (A/B) multiplied by C, where A denotes total value of exempted services provided during the preceding financial year, B denotes total value of taxable and exempted services provided during the preceding financial year, and C denotes total CENVAT credit of inputs and input services taken during the month;

(b) pay the amount attributable to exempted services determined as above for each month, on or before 5th day of the following month;

(c) determine the CENVAT credit attributable to exempted services for the whole financial year in the following manner, namely:-

CENVAT credit attributable to exempted services = (X/Y) multiplied by Z, where X denotes total value of exempted services provided during the financial year, Y denotes total value of taxable and exempted services provided during the financial year, and Z denotes total CENVAT credit of inputs and input services taken during the financial year;

(d) pay an amount equal to the difference between the amount determined as per item (c) and the amount determined as per item (a), on or before the 30th June of the succeeding financial year, where the amount determined as per item (c) is more than the amount paid;

(e) in addition to the amount short-paid, be liable to pay interest at the rate of twenty-four per cent. per annum from the due date i.e. 30th June till the date of payment, where the amount short-paid is not paid within the said due date;

(f) where the amount determined as per item (c) is less than the amount determined and paid as per item (a), adjust the excess amount on his own, by taking credit of such amount;
 

(iv) the provider of output service shall intimate to the jurisdictional Superintendent of Central Excise, within a period of fifteen days from the date of such payment or adjustment, the following particulars, namely:-
 

(a) details of CENVAT credit attributable to exempted services, monthwise, for the whole financial year, determined provisionally as per part (iii) item (a),

(b) the amount equivalent to CENVAT credit attributable to exempted services, determined provisionally for each month and paid monthwise as per part (iii)item(b),

(c) CENVAT credit attributable to exempted services for the whole financial year as determined as per part (iii) item (c),

(d) amount short paid determined as per part (iii) item (d), alongwith the date of payment of the amount short paid,

(e) interest payable and paid, if any, on the amount short paid, determined as per part (iii) item (e), and

(f) credit taken on account of excess payment, if any, determined as per part (iii)item(f);

(v) where the amount equivalent to CENVAT credit attributable to exempted services can not be determined provisionally since no taxable service referred to in sub-clause (d) of clause (105) of section 65 of the Finance Act has been provided, the provider of output service is not required to determine, provisionally, and pay CENVAT credit attributable to exempted services for each month but he shall determine the CENVAT credit attributable to exempted services for the whole year as prescribed in part (iii) item (c) and pay the amount so calculated on or before 30th June of the succeeding financial year.

(vi) where the amount determined under part (v) is not paid within the said due date i.e. the 30th June, the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty four per cent. per annum from the due date till the date of payment.

(Above conditions after Explanation II, has been inserted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007 with effect from the 1st day of April, 2007)

Explanation III.- For the removal of doubts, it is hereby clarified that the credit shall not be allowed on inputs and inputs services used exclusively for the manufacture of exempted goods or exempted services.

(Explanation III has been inserted vide NTF. NO. 27/2005-CE(N.T.), DT. 16/05/2005)]

(3B) A banking company and a financial institution including a nonbanking financial company, engaged in providing services by way of extending deposits, loans or advances, in addition to options given in sub-rules (1), (2) and (3), shall have the option to pay for every month an amount equal to fifty per cent. of the CENVAT credit availed on inputs and input services in that month.

(Above sub-rule (3B) has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  )

[OLD- (3B) Notwithstanding anything contained in sub-rules (1), (2) and (3), a banking company and a financial institution including a non-banking financial company,  [OLD- providing taxable service specified in sub-clause (zm) of clause (105) of section 65 of the Finance Act], shall pay for every month an amount equal to fifty per cent. of the CENVAT credit availed on inputs and input services in that month.]

(In above sub-rule (3B) the words "engaged in providing services by way of extending deposits, loans or advances" has been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OMITTED -
(3C) Notwithstanding anything contained in sub-rules (1), (2), (3) and (3B), a provider of output service providing taxable services as specified in sub-clauses (zx) and (zzzzf) of clause (105) of section 65 of the Finance Act, shall pay for every month an amount equal to twenty per cent. of the CENVAT credit availed on inputs and input services in that month. ]

(Above sub-rule (3C) been omitted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

(3D) Payment of an amount under sub-rule (3) shall be deemed to be CENVAT credit not taken for the purpose of an exemption notification wherein any exemption is granted on the condition that no CENVAT credit of inputs and input services shall be taken.

Explanation I. - “Value” for the purpose of sub-rules (3) and (3A),—

(a) shall have the same meaning as assigned to it under section 67 of the Finance Act, read with rules made thereunder or, as the case may be, the value determined under section 3, 4 or 4A of the Excise Act, read with rules made thereunder;

(b) in the case of a taxable service, when the option available under sub-rules (7),(7A),(7B) or (7C) of rule 6 of the Service Tax Rules, 1994, has been availed, shall be the value on which the rate of service tax under section 66B of the Finance Act, read with an exemption notification, if any, relating to such rate, when applied for calculation of service tax results in the same amount of tax as calculated under the option availed; or

(c) in case of trading, shall be the difference between the sale price and the cost of goods sold (determined as per the generally accepted accounting principles without including the expenses incurred towards their purchase) or ten per cent of the cost of goods sold, whichever is more.

(d) in case of trading of securities, shall be the difference between the sale price and the purchase price of the securities traded or one per cent. of the purchase price of the securities traded, whichever is more.

(e) shall not include the value of services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;

Provided that this clause shall not apply to a banking company and a financial institution including a non-banking financial company, engaged in providing services by way of extending deposits, loans or advances.

(Above proviso has been inserted vide NTF. NO. 04/2017-CE (NT), DT. 02/02/2017)

(In above sub-rule (3D), Explanation I has been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD-

Explanation I. - "Value" for the purpose of sub-rules (3) and (3A),-

(a) shall have the same meaning as assigned to it under section 67 of the Finance Act, read with rules made there under or, as the case may be, the value determined under section 3, 4 or 4A of the Excise Act, read with rules made thereunder.

(b) in the case of a taxable service, when the option available under sub-rules (7),(7A),(7B) [OLD-  (7), (7B) ] or (7C) of rule 6 of the Service Tax Rules, 1994, or the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 has been availed, shall be the value on which the rate of service tax under section 66 of the Finance Act, read with an exemption notification, if any, relating to such rate, when applied for calculation of service tax results in the same amount of tax as calculated under the option availed; or

(In Explanation I, in clause (b) the words "(7),(7A),(7B)" has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

(c) in case of trading, shall be the difference between the sale price and the cost of goods sold (determined as per the generally accepted accounting principles without including the expenses incurred towards their purchase) or ten per cent. of the cost of goods sold, whichever is more  [OLD- shall be the difference between the sale price and the purchase price of the goods traded.]]

(In above clause (c) the words "shall be the difference between the sale price and the cost of goods sold (determined as per the generally accepted accounting principles without including the expenses incurred towards their purchase) or ten per cent. of the cost of goods sold, whichever is more" has been substituted vide NTF. NO. 13/2011-CE (NT), DT. 31/03/2011)

Explanation II. - The amount mentioned in sub-rules (3), (3A), and (3B) [OLD - (3B) and (3C) ], unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March.

Explanation III. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (3), (3A), and (3B) [OLD - (3B) and (3C) ], it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken.

(In Explanation II & Explanation III the brackets, figures ,letters and word "and (3B)" has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

Explanation IV.- In case of a manufacturer who avails the exemption under a notification based on the value of clearances in a financial year and a service provider who is an individual or proprietary firm or partnership firm, the expressions, "following month" and "month of March" occurring in sub-rules (3) and (3A) shall be read respectively as "following quarter" and "quarter ending with the month of March".

((3B) & (3C) & Explanation has been added vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 )

(4) No CENVAT credit shall be allowed on capital goods used exclusively in the manufacture of exempted goods or in providing exempted services for a period of two years from the date of commencement of the commercial production or provision of services, as the case may be, other than the final products or output services which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made or services provided in a financial year:

Provided that where capital goods are received after the date of commencement of commercial production or provision of services, as the case may be, the period of two years shall be computed from the date of installation of such capital goods.

(Above sub-rule (4) has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  )

[OLD- (4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year. ]
 

[OMITTED -

(5) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services.]

(Above sub-rule (5) has been omitted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011)

(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either-

(i) cleared to a unit in a special economic zone; or

(ii) cleared to a hundred per cent. export-oriented undertaking; or

(iii)cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or

(iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95-Central Excise, dated the 28th August, 1995, number G. S R. 602 (E), dated the 28th August, 1995; or

(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of notification No. 12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012 [OLD- 6/2006- Central Excise dated the 1st March, 2006, number G.S.R.96(E), dated the 1st March, 2006; ] or

(In rule 6 in sub-rule (6) in clause (iva) the words and figures "12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012" has been substituted vide NTF. NO. 25/2012-CE (NT), DT. 08/05/2012)

(Above clause (iva) has been inserted vide NTF. NO. 27/2010-CE(N.T.), DT. 01/07/2010)

(v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or

(vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or.

(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of the said Customs Tariff Act when imported into India and are supplied,-

(a) against International Competitive Bidding; or

(b) to a power project from which power supply has been tied up through tariff based competitive bidding; or

(c) to a power project awarded to a developer through tariff based competitive bidding, in terms of notification No. 12/2012-Central Excise, dated the 17th March, 2012 [OLD- 6/2006-Central Excise, dated the 1st March, 2006].

(In rule 6 in sub-rule (6) in clause (vii) the words and figures "12/2012-Central Excise, dated the 17th March, 2012" has been substituted vide NTF. NO. 25/2012-CE (NT), DT. 08/05/2012)

(Above clause (vii) has been substituted vide NTF. NO. 06/2010-CE(N.T.), DT. 27/02/2010)

[OLD-
(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under section 3 of the said Customs Tariff Act when imported into India and supplied against International Competitive Bidding in terms of notification No. 6/2002-Central Excise dated the 1 st March, 2002 or notification No. 6/2006-Central Excise dated the 1 st March, 2006, as the case may be [OLD- notification No. 6/2002-Central Excise dated the 1st March, 2002.]]

(In clause (vii) the words and figures "notification No. 6/2002-Central Excise dated the 1 st March, 2002 or notification No. 6/2006-Central Excise dated the 1 st March, 2006, as the case may be" has been substituted vide NTF. NO. 09/2006-CE(N.T.), DT. 21/04/2006)

(In Above item (vi), the words "zinc by smelting; or" substituted vide & item (vii) has been added vide NTF. NO. 03/2005-CE(N.T.), DT. 28/01/2005)

(viii) supplies made for setting up of solar power generation projects or facilities;

(In rule 6 in sub-rule (6) clause (viii) has been inserted vide NTF. NO. 25/2012-CE (NT), DT. 08/05/2012)

[OMITTED - (ix) Ethanol produced from molasses generated from cane crushed in the sugar season 2015-16 i.e. 1st October, 2015 onwards, for supply to the public sector oil marketing companies, namely, Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. or Bharat Petroleum Corporation Ltd., for the purposes of blending with petrol, in terms of the provisions of S.No.40A of the Table in notification No.12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated that 17th March, 2012.]

(Above clause (ix) has been omitted vide NTF. NO. 41/2016-CE (NT), DT. 10/08/2016 )

(Above clause (ix) has been inserted vide NTF. NO. 21/2015-CE (NT), DT. 07/10/2015 )

(7) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the taxable services are provided, without payment of service tax, to a unit in a Special Economic Zone or to a developer of a Special Economic Zone for their authorised operations or when a service is exported, or when a service is provided or agreed to be provided by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India

(In above sub-rule (7) the words "or when a service is provided or agreed to be provided by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India" has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016  wef 01.03.2016)

(8) For the purpose of this rule, a service provided or agreed to be provided shall not be an exempted service when:-

(a) the service satisfies the conditions specified under rule 6A of the Service Tax Rules, 1994 and the payment for the service is to be received in convertible foreign currency; and

(b) such payment has not been received for a period of six months or such extended period as maybe allowed from time-to-time by the Reserve Bank of India, from the date of provision.

Provided that if such payment is received after the specified or extended period allowed by the Reserve Bank of India but within one year from such period, the service provider shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier in terms of sub rule (3) to the extent it relates to such payment, on the basis of documentary evidence of the payment so received.”.

(Above proviso has been inserted vide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014 WEF 01/09/2014)

(In above sub-rule (7) & (8) has been inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

[OLD-(6A) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the taxable services are provided, without payment of service tax, to a Unit in a Special Economic Zone or to a Developer of a Special Economic Zone for their authorised operations.]

(Above sub-rule (6A) has been inserted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

7. Manner of distribution of credit by input service distributor.-

The input service distributor shall distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or unit providing output service or an outsourced manufacturing units, as defined in Explanation 4, subject to the following conditions, namely :—

(a) the credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon;

(b) the credit of service tax attributable as input service to a particular unit shall be distributed only to that unit;

(c) the credit of service tax attributable as input service to more than one unit but not to all the units shall be distributed only amongst such units to which the input service is attributable and such distribution shall be pro rata on the basis of the turnover of such units, during the relevant period, to the total turnover of all such units to which such input service is attributable and which are operational in the current year, during the said relevant period;

(d) the credit of service tax attributable as input service to all the units shall be distributed to all the units pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all the units, which are operational in the current year, during the said relevant period;

(e) outsourced manufacturing unit shall maintain separate account for input service credit received from each of the input service distributors and shall use it only for payment of duty on goods manufactured for the input service distributor concerned;

(f) credit of service tax paid on input services, available with the input service distributor, as on the 31st of March, 2016, shall not be transferred to any outsourced manufacturing unit and such credit shall be distributed amongst the units excluding the outsourced manufacturing units.

Explanation.-The provision of this clause shall, mutatis-mutandis, apply to any outsourced manufacturer commencing production of goods on or after the 1st of April, 2016;

(g) provisions of rule 6 shall apply to the units manufacturing goods or provider of output service and shall not apply to the input service distributor. Explanation 1.- For the purposes of this rule, "unit" includes the premises of a provider of output service or the premises of a manufacturer including the factory, whether registered or otherwise or the premises of an outsourced manufacturing unit.

Explanation 2.–For the purposes of this rule, the total turnover shall be determined in the same manner as determined under rule 5:

Provided that the turnover of an outsourced manufacturing unit shall be the turnover of goods manufactured by such outsourced manufacturing unit for the input service distributor.

Explanation 3.– For the purposes of this rule, the ‗relevant period‘ shall be, -

(a) if the assessee has turnover in the ‗financial year‘ preceding to the year during which credit is to be distributed for month or quarter, as the case maybe, the said financial year; or;

(b) if the assessee does not have turn over for some or all the units in the preceding financial year, the last quarter for which details of turnover of all the units are available, previous to the month or quarter for which credit is to be distributed.

Explanation 4.– For the purposes of this rule, "outsourced manufacturing unit" means a job-worker who is liable to pay duty on the value determined under rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 on the goods manufactured for the input service distributor or a manufacturer who manufactures goods, for the input service distributor under a contract, bearing the brand name of such input service distributor and is liable to pay duty on the value determined under section 4A of the Excise Act.

(Above rule 7 has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

[OLD- 7. Manner of distribution of credit by input service distributor. -

The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following conditions, namely:—

(a) the credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon;

(b) credit of service tax attributable to service used by one or more units [OLD - used in a unit ] exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed;

(c) credit of service tax attributable to service [OLD - used wholly in a unit ] shall be distributed only to that unit; and

(d) credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all its units, which are operational in the current year, during the said relevant period.

(In above clause (b) the words "used by one or more units", in clause (c) "used wholly by a unit" and clause (d)  has been substituted vide NTF. NO. 05/2014-CE (NT), DT. 24/02/2014)

[OLD -(d) credit of service tax attributable to service used in more than one unit shall be distributed pro rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units to which the service relates during the same period.]

[OLD -(d) credit of service tax attributable to service used in more than one unit shall be distributed prorata on the basis of the turnover of the concerned unit to the sum total of the turnover of all the units to which the service relates.]

Explanation 1.- For the purposes of this rule, "unit"includes the premises of a provider of output service and the premises of a manufacturer including the factory, whether registered or otherwise.

Explanation 2.- For the purposes of this rule, the total turnover shall be determined in the same manner as determined under rule 5.

Explanation 3.- For the purposes of this rule, the ‘relevant period’ shall be,-

(a) If the assessee has turnover in the ‘financial year’ preceding to the year during which credit is to be distributed for month or quarter, as the case may be, the said financial year; or

(b) If the assessee does not have turnover for some or all the units in the preceding financial year, the last quarter for which details of turnover of all the units are available, previous to the month or quarter for which credit is to be distributed.

(Above Explanation 3 has been substituted vide NTF. NO. 05/2014-CE (NT), DT. 24/02/2014)

[OLD - Explanation 3. - (a) The relevant period shall be the month previous to the month during which the CENVAT credit is distributed.

(b) In case if any of its unit pays tax or duty on quarterly basis as provided in rule 6 of Service Tax Rules, 1994 or rule 8 of Central Excise Rules, 2002 then the relevant period shall be the quarter previous to the quarter during which the CENVAT credit is distributed.

(c) In case of an assessee who does not have any total turnover in the said period, the input service distributor shall distribute any credit only after the end of such relevant period wherein the total turnover of its units is available.]

(In above rule 7, clause (d) - substituted and Explanation 3 - inserted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(Above Rule 7  has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )]

[OLD-

7. Manner of distribution of credit by input service distributor.-

The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following condition, namely:-

(a) the credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon; or

(b) credit of service tax attributable to service use in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed. ]

7A. Distribution of credit on inputs by the office or any other premises of output service provider.-

(1) A provider of output service shall be allowed to take credit on inputs and capital goods received, on the basis of an invoice or a bill or a challan issued by an office or premises of the said provider of output service, which receives invoices, issued in terms of the provisions of the Central Excise Rules, 2002, towards the purchase of inputs and capital goods.

(2) The provisions of these rules or any other rules made under the Central Excise Act, 1944, as made applicable to a first stage dealer or a second stage dealer, shall mutatis mutandis apply to such office or premises of the provider of output service.

(Rule 7A has been inserted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008)

7B. Distribution of credit on inputs by warehouse of manufacturer. -

(1) A manufacturer having one or more factories, shall be allowed to take credit on inputs received under the cover of an invoice issued by a warehouse of the said manufacturer, who receives inputs under cover of documents specified under rule 9 [OLD- invoices, issued in terms of the provisions of the Central Excise Rules, 2002], towards the purchase of such inputs.

(In above sub-rule (1) the words "documents specified under rule 9" has been substituted vide NTF. NO. 23/2016-CE (NT), DT. 01/04/2016 )

(2) The provisions of these rules or any other rules made under the Excise Act as applicable to a first stage dealer or a second stage dealer, shall, mutatis mutandis, apply to such warehouse of the manufacturer.

(Above rule 7B has been inserted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

8. Storage of input outside the factory of the manufacturer.-

The Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of a manufacturer of the final products may, in exceptional circumstances having regard to the nature of the goods and shortage of storage space at the premises of such manufacturer, by an order, permit such manufacturer to store the input in respect of which CENVAT credit has been taken, outside such factory, subject to such limitations and conditions as he may specify:

Provided that where such input is not used in the manner specified in these rules for any reason whatsoever, the manufacturer of the final products shall pay an amount equal to the credit availed in respect of such input.

9. Documents and accounts.-

(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 or a service provider for clearance of  [OLD- a manufacturer for clearance of - ]

(In above sub-rule (i) the words "a manufacturer or a service provider for clearance of" has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

(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;

[OMITTED - (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; ]

(In Rule 9 in sub-rule (1), in clause (a),  sub-clause (ii) & (iii) omitted vide NTF. NO. 18/2013-CE (NT), DT. 31/12/2013)

(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.

(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.

(Above clause (bb) has been inserted vide NTF. NO. 13/2011-CE (NT), DT. 31/03/2011)

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

(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".

(Above clause (e) has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

[OLD - (e) a challan evidencing payment of service tax by the person liable to pay service tax under sub-clauses (iii), (iv), (v) and (vii) [OLD- sub-clauses (iii), (iv) and (v)] of clause (d) of sub-rule (1) of rule (2) of the Service Tax Rules, 1994; or ]

(In clause (e) the words, brackets and figures "sub-clauses (iii), (iv), (v) and (vii)" has been amended vide NTF. NO. 10/2006-CE(N.T.), DT. 25/04/2006)

(In clause (e) words ", (iv) and (v)" has been substituted vide NTF. NO. 28/2005-CE(N.T.), DT. 07/06/2005)

(ea) a challan evidencing payment of service tax by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India; or.

(Above clause (ea)  has been inserted  vide NTF. NO. 10/2017-CE (NT), DT. 13/04/2017 )

(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 issued by the Indian Railways; or

(Above clause (fa) has been substituted vide NTF. NO. 45/2016-CE (NT), DT. 20/09/2016)

[OLD- (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 ]

(Above clause (fa) has been inserted vide NTF. NO. 26/2014-CE (NT), DT. 27/08/2014)

(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;

(Above proviso has been inserted vide NTF. NO. 35/2007-CE(N.T.), DT. 14/09/2007)

(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 [OLD- assessable value], name and address of the factory or warehouse or premises of first or second stage dealers or provider of output service [OLD- provider of taxable 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

(In above proviso at rule 9 the words "provider of output service" has been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

(In above sub-rule (2) in proviso the words "assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be" has been substituted vide NTF. NO. 19/2007-CE(NT), DT. 09/03/2007)

[OLD-
(2) The CENVAT credit shall not be denied on the grounds that any of the documents mentioned in sub-rule (1) does not contain all the particulars required to be contained therein under these rules, if such document contains details of payment of duty or service tax, description of the goods or taxable service, assessable value, name and address of the factory or warehouse or provider of input service:

Provided that the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of a manufacturer or provider of output service intending to take CENVAT credit, or the input service distributor distributing CENVAT credit on input service, is satisfied that the duty of excise or service tax due on the input or input service has been paid and such input or input service has actually been used or is to be used in the manufacture of final products or in providing output service, then, such Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, shall record the reasons for not denying the credit in each case. ]

[OMITTED -
(3) The manufacturer or producer of excisable goods or provider of output service taking CENVAT credit on input or capital goods or input service, or the input service distributor distributing CENVAT credit on input service shall take all reasonable steps to ensure that the input or capital goods or input service in respect of which he has taken the CENVAT credit are goods or services on which the appropriate duty of excise or service tax as indicated in the documents accompanying the goods or relating to input service, has been paid.

Explanation.- The manufacturer or producer of excisable goods or provider of output service taking CENVAT credit on input or capital goods or input service or the input service distributor distributing CENVAT credit on input service on the basis of, invoice, bill or, as the case may be, challan received by him for distribution of input service credit shall be deemed to have taken reasonable steps if he satisfies himself about the identity and address of the manufacturer or supplier or provider of input service, as the case may be, issuing the documents specified in sub-rule (1), evidencing the payment of excise duty or the additional duty of customs or service tax, as the case may be, either-

(a) from his personal knowledge; or

(b) on the basis of a certificate given by a person with whose handwriting or signature he is familiar; or

(c) on the basis of a certificate issued to the manufacturer or the supplier or, as the case may be, the provider of input service by the Superintendent of Central Excise within whose jurisdiction such manufacturer has his factory or such supplier or provider of output service has his place of business or where the provider of input service has paid the service tax,

and where the identity and address of the manufacturer or the supplier or the provider of input service is satisfied on the basis of a certificate, the manufacturer or producer or provider of output service taking the CENVAT credit or input service distributor distributing CENVAT credit shall retain such certificate for production before the Central Excise Officer on demand. ]

(4) The CENVAT credit in respect of input or capital goods purchased from a first stage dealer or second stage dealer shall be allowed only if such first stage dealer or second stage dealer, as the case may be, has maintained records indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him.

Provided that provisions of this sub-rule shall apply mutatis mutandis to an importer who issues an invoice on which CENVAT credit can be taken.

(Above proviso has been inserted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(5) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.

(6) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt and consumption of the input services in which the relevant information regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the input service has been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.

(7) The manufacturer of final products shall submit within ten days from the close of each month to the Superintendent of Central Excise, a monthly return in the form specified, by notification, by the Board:

Provided that where a manufacturer is availing exemption under a notification based on the value or quantity of clearances in a financial year, he shall file a quarterly return in the form specified, by notification, by the Board within ten days [OLD- twenty days ] after the close of the quarter to which the return relates.

(In above sub-rule (7) the words "ten days" has been substituted vide NTF. NO. 03/2011-CE (NT), DT. 01/03/2011 wef 01/03/2011)

(8) A first stage dealer or a second stage dealer or a registered importer, as the case may be, shall submit within fifteen days from the close of each quarter of a year to the Superintendent of Central Excise, a return in the form specified, by notification, by the Board.

Provided that the first stage dealer or second stage dealer or registered importer, as the case may be, shall submit the said return electronically.

(In above sub-rule (8) the words "or a registered importer" & "or registered importer" has been inserted vide NTF. NO. 09/2014-CE (NT), DT. 28/02/2014)

(Above proviso has been inserted vide NTF. NO. 21/2010-CE(N.T.), DT. 18/05/2010)

(9) The provider of output service availing CENVAT credit, shall submit a half yearly return in form specified, by notification, by the Board to the Superintendent of Central Excise, by the end of the month following the particular quarter or half year.

(10) The input service distributor, shall furnish a half yearly return in such form as may be specified, by notification, by the Board, giving the details of credit received and distributed during the said half year to the jurisdictional Superintendent of Central Excise, not later than the last day of the month following the half year period.

(Sub-rule (10) has been substituted vide NTF. NO. 28/2005-CE(N.T.), DT. 07/06/2005)

[OLD-
(10) The input service distributor, shall submit a half yearly Statement, giving the details of credit received and distributed during the said half year to the Superintendent of Central Excise, by the end of the month following the half year.]

(11) The provider of output service, availing CENVAT credit referred to in sub-rule (9) or the input service distributor referred to in sub-rule (10), as the case may be, may submit a revised return to correct a mistake or omission within a period of sixty days from the date of submission of the return under sub-rule (9) or sub-rule (10), as the case may be.

(In rule 9, sub-rule (2) - substituted, sub-rule (3) - omitted and sub-rule (11) has been inserted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

"9A. Annual return.- (1) A manufacturer of final products or provider of output services, shall submit to the Superintendent of Central Excise an annual return for each financial year, by the 30th day of November of the succeeding year, in the form as specified by a notification by the Board.

(2) The provisions of rule 12 of the Central Excise Rules, 2002, in so far as they relate to annual return shall, mutatis-mutandis, apply to the annual return required to be filed under this rule.

(Above rule 9A has been substituted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

[OLD- 9A.  Information relating to principal inputs. -

(1) A manufacturer of final products shall furnish to the Superintendent of Central Excise, annually by 30th April of each Financial Year, a declaration in the Form specified, by a notification, by the Board, in respect of each of the excisable goods manufactured or to be manufactured by him, the principal inputs and the quantity of such principal inputs required for use in the manufacture of unit quantity of such final products:

Provided that for the year 2004-05, such information shall be furnished latest by 31st December, 2004.
 

[ OMITTED -
Provided further that where a manufacturer of final products has paid total duty of rupees ten lakh or more including the amount of duty paid by utilization of CENVAT credit in the preceding financial year, he shall file such declaration electronically. ]

(Above second proviso has been omitted vide NTF. NO. 22/2011-CE (NT), DT. 14/09/2011)

(Above proviso has been inserted vide NTF. NO. 21/2010-CE(N.T.), DT. 18/05/2010)

(2) If a manufacturer of final products intends to make any alteration in the information so furnished under sub-rule (1), he shall furnish information to the Superintendent of Central Excise together with the reasons for such alteration before the proposed change or within 15 days of such change in the Form specified by the Board under sub-rule (1).

(3) A manufacturer of final products shall submit, within ten days from the close of each month, to the Superintendent of Central Excise, a monthly return in the Form specified, by a notification, by the Board, in respect of information regarding the receipt and consumption of each principal inputs with reference to the quantity of final products manufactured by him.

[OMITTED -
Provided that where a manufacturer of final products has paid total duty of rupees ten lakh or more including the amount of duty paid by utilization of CENVAT credit in the preceding financial year, he shall file the said monthly return electronically: ]

(Above proviso has been omitted vide NTF. NO. 22/2011-CE (NT), DT. 14/09/2011)

(Above proviso has been inserted vide NTF. NO. 21/2010-CE(N.T.), DT. 18/05/2010)

(4) The Central Government may, by notification and subject to such conditions or limitations, as may be specified in such notification, specify manufacturers or class of manufacturers who may not be required to furnish declaration mentioned in sub-rule (1) or monthly return mentioned in sub-rule (3).

(5) Every assessee shall file electronically, the declaration or the return, as the case may be, specified in this rule.

(Above sub-rule (5)  has been inserted vide NTF. NO. 22/2011-CE (NT), DT. 14/09/2011)

Explanation: For the purposes of this rule, principal inputs�, means any input which is used in the manufacture of final products where the cost of such input constitutes not less than 10% of the total cost of raw-materials for the manufacture of unit quantity of a given final products.

(Above rule 9A. has been added vide NTF. NO. 38/2004-CE(N.T.), DT. 25/11/2004)

(Please refer NTF. NO. 39/2004-CE(N.T.), DT. 25/11/2004 for Class of manufacturers, of final products who manufacture excisable goods)

(Please refer NTF. NO. 40/2004-CE(N.T.), DT. 25/11/2004 for FORM ER - 5)

(Please refer NTF. NO. 41/2004-CE(N.T.), DT. 25/11/2004 for FORM ER - 6)]

10. Transfer of CENVAT credit.-

(1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory.

(2) If a provider of output service shifts or transfers his business on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated business.

(3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant Commissioner of Central Excise.

(4) Subject to the provisions contained in sub-rule (3), the transfer of the CENVAT Credit shall be allowed within a period of three months from the date of receipt of application by the Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be:

Provided that the period specified in this sub-rule may, on sufficient cause being shown and reasons to be recorded in writing, be extended by the Principal Commissioner of Central Excise or Commissioner of Central Excise, as the case may be, for a further period not exceeding six months.

(Above sub-rule (4) has been inserted vide NTF. NO. 04/2017-CE (NT), DT. 02/02/2017)

10A. Transfer of CENVAT credit of additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act.—

(1) A manufacturer or producer of final products, having more than one registered premises, for each of which registration under the Central Excise Rules, 2002 has been obtained on the basis of a common Permanent Account Number under the Income-tax Act, 1961 (43 of 1961), may transfer unutilised CENVAT credit of additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, lying in balance with one of his registered premises at the end of a quarter, to his other registered premises by—

(i) making an entry for such transfer in the documents maintained under rule 9;

(ii) issuing a transfer challan containing registration number, name and address of the registered premises transferring the credit and receiving such credit, the amount of credit transferred and the particulars of such entry as mentioned in clause (i),

and such recipient premises may take CENVAT credit on the basis of the transfer challan:

Provided that nothing contained in this sub-rule shall apply if the transferring and recipient registered premises are availing the benefit of the following notifications of the Government of India in the Ministry of Finance (Department of Revenue), namely:-

(i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated the 8th July, 1999];

(ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated the 8th July, 1999];

(iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565 (E), dated the 31st July, 2001];

(iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the 14th November, 2002];

(v) No. 57/2002-Central Excise, dated the 14th November, 2002 [G.S.R.. 765(E), dated the 14th November, 2002];

(vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003];

(vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717 (E), dated the 9th September, 2003];

(viii) No.20/2007-Central Excise, dated the 25th April, 2007 [G.S.R. 307 (E), dated the 25th April, 2007]; and

(ix) No. 1/2010-Central Excise dated the 6th February, 2010 [G.S.R. 62 (E), dated the 6th February, 2010].

(2) The manufacturer or producer shall submit the monthly return, as specified under these rules, separately in respect of transferring and recipient registered premises.

(Above Rule 10A has been inserted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

11. Transitional provision.-

(1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules.

(2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export.

(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and is lying in stock or in process or is contained in the final product lying in stock, if,-

(i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under section 5A of the Act; or

(ii) the said final product has been exempted absolutely under section 5A of the Act, and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported.

(4) A provider of output service shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for providing the said service and is lying in stock or is contained in the taxable service pending to be provided, when he opts for exemption from payment of whole of the service tax leviable on such taxable service under a notification issued under section 93 of the Finance Act, 1994(32 of 1994) and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export or for payment of service tax on any other output service, whether provided in India or exported.

(In rule 11, sub-rule (3) & (4) has been inserted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

12. Special dispensation in respect of inputs manufactured in factories located in specified areas of North East region, Kutch district of Gujarat, State of Jammu and Kashmir and State of Sikkim.-

Notwithstanding anything contained in these rules but subject to the proviso to clause (i) of sub rule (1) of the rule 3 [OLD- Notwithstanding anything contained in these rules], where a manufacturer has cleared any inputs or capital goods, in terms of notifications of the Government of India in the Ministry of Finance (Department of Revenue) No. 32/99- Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated the 8th July, 1999] or No. 33/99- Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated the 8th July, 1999] or No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565(E), dated the 31st July, 2001] or notification of the Government of India in the erstwhile Ministry of Finance and Company Affairs (Department of Revenue) No.56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated 14th November, 2002]or No.57/2002-Central Excise, dated the 14th November, 2002 [ GSR 765(E), dated the 14th November, 2002] or notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003] or 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R.717 (E), dated the 9th September, 2003,] or No.20/2007-Central Excise, dated the 25th April, 2007 [ GSR 307 (E), dated the 25th April, 2007] or No.1/2010-Central Excise, dated the 6th February, 2010 [G.S.R. 62(E), dated the 6th February, 2010] the CENVAT credit on such inputs or capital goods shall be admissible as if no portion of the duty paid on such inputs or capital goods was exempted under any of the said notifications.

(In above rule 12 the words figures , letters and brackets "or No.1/2010-Central Excise, dated the 6th February, 2010 [G.S.R. 62(E), dated the 6th February, 2010]" has been inserted vide NTF. NO. 02/2014-CE (NT), DT. 20/01/2014)

(In above rule 12 the words "Notwithstanding anything contained in these rules but subject to the proviso to clause (i) of sub rule (1) of the rule 3" has been substituted vide NTF. NO. 01/2012-CE (NT), DT. 09/02/2012)

(Above rule 12, the words, figures, letters and brackets, "or No.20/2007-Central Excise, dated the 25th April, 2007 [ GSR 307 (E), dated the 25th April, 2007]" has been inserted vide NTF. NO. 32/2007-CE(N.T.), DT. 03/08/2007)

12A. Procedure and facilities for large taxpayer.-

Notwithstanding anything contained in these rules, the following procedure shall apply to a large taxpayer,-

(1) A large taxpayer may remove inputs, except motor spirit, commonly known as petrol, high speed diesel and light diesel oil or capital goods, as such, on which CENVAT credit has been taken, without payment of an amount specified in sub-rule (5) of rule 3 of these rules, under the cover of a transfer challan or invoice, from any of his registered premises (hereinafter referred to as the sender premises) to his other registered premises, other than a premises of a first or second stage dealer (hereinafter referred to as the recipient premises), for further use in the manufacture or production of final products in recipient premises subject to condition that the final products are manufactured or produced using the said inputs and cleared on payment of appropriate duties of excise leviable thereon within a period of six months, from the date of receipt of the inputs in the recipient premises; or the final products are manufactured or produced using the said inputs and exported out of India, under bond or letter of undertaking within a period of six months, from the date of receipt of the input goods in the recipient premises, and that any other conditions prescribed by the Commissioner of Central Excise, Large Taxpayer Unit in this regard are satisfied:

Explanation 1. The transfer challan or invoice shall be serially numbered and shall contain the registration number, name, address of the large taxpayer, description, classification, time and date of removal, mode of transport and vehicle registration number, quantity of the goods and registration number and name of the consignee:

Provided that if the final products manufactured or produced using the said inputs are not cleared on payment of appropriate duties of excise leviable thereon or are not exported out of India within the said period of six months from the date of receipt of the input goods in the recipient premises, or such inputs are cleared as such from the recipient premises, an amount equal to the credit taken in respect of such inputs by the sender premises shall be paid by the recipient premises with interest in the manner and rate specified under rule 14 of these rules:

Provided further that if such capital goods are used exclusively in the manufacture of exempted goods, or such capital goods are cleared as such from the recipient premises, an amount equal to the credit taken in respect of such capital goods by the sender premises shall be paid by the recipient premises with interest in the manner and rate specified under rule 14 of these rules:

Explanation 2. If a large taxpayer fails to pay any amount due in terms of the first and second proviso, it shall be recovered along with interest in the manner as provided under rule 14 of these rules:

Provided also that nothing contained in this sub-rule shall be applicable if the recipient premises is availing following notifications of Government of India in the Ministry of Finance (Department of Revenue), -

(i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated 8th July, 1999];

(ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated 8th July, 1999];

(iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565 (E), dated the 31st July, 2001];

(iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the 14th November, 2002];

(v) No. 57/2002-Central Excise, dated 14th November, 2002 [G.S.R.. 765(E), dated the 14th November, 2002];

(vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003]; [OMITTED - and ]

(vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717 (E), dated the 9th September, 2003]:

(viii) No.20/2007-Central Excise, dated the 25th April, 2007 [G.S.R. 307 (E), dated the 25th April, 2007]; and [OLD-  [ GSR 307 (E), dated the 25th April, 2007];]

(ix) No. 1/2010-Central Excise, dated the 6th February, 2010 [G.S.R. 62 (E), dated the 6th February, 2010]

(In above sub-rule (1), in item (vI) the word "and" - omitted, in item (viii) the brackets, letters, figures and words "[G.S.R. 307 (E), dated the 25th April, 2007]; and" - substituted, and item (ix) - inserted  vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

Provided also that nothing contained in this sub-rule shall be applicable to a export oriented unit or a unit located in a Electronic Hardware Technology Park or Software Technology Park.

(2) The first recipient premises may take CENVAT credit of the amount paid under first proviso to sub-rule(1) as if it was a duty paid by the sender premises who removed such goods on the basis of a document showing payment of such duties.

(3) CENVAT credit of the specified duties taken by a sender premises shall not be denied or varied in respect of any inputs or capital goods, removed as such under sub-rule (1) on the ground that the said inputs or the capital goods have been removed without payment of an amount specified in sub-rule (5) of rule 3 of these rules; or

on the ground that the said inputs or capital goods have been used in the manufacture of any intermediate goods removed without payment of duty under sub-rule (1) of rule 12BB of Central Excise Rules, 2002.

Explanation : For the purpose of this sub-rule ¡®intermediate goods shall have the same meaning assigned to it in sub-rule (1) of rule 12BB of the Central Excise Rules, 2002.

(4) A large taxpayer may transfer, CENVAT credit taken, on or before the 10th July, 2014, by one of his registered manufacturing premises [OLD- available with one of his registered manufacturing premises ] or premises providing taxable service to his other such registered premises by,-

(In above sub-rule (4) the words " “taken, on or before the 10th July, 2014, by one of his registered manufacturing premises" has been substitutedvide NTF. NO. 21/2014-CE (NT), DT. 11/07/2014 WEF 01/09/2014)

(i) making an entry for such transfer in the record maintained under rule 9; issuing a transfer challan containing registration number, name and address of the registered premises transferring the credit as well as receiving such credit, the amount of credit transferred and the particulars of such entry as mentioned in clause (i), and such recipient premises can take CENVAT credit on the basis of such transfer challan as mentioned in clause (ii):

Provided that such transfer or utilisation of CENVAT credit shall be subject to the limitations prescribed under clause (b) of sub-rule (7) of rule 3.

Provided further that nothing contained in this sub-rule shall be applicable if the registered manufacturing premises is availing following notifications of Government of India in the Ministry of Finance (Department of Revenue), - 

(i) No. 32/99-Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated 8th July, 1999];

(ii) No. 33/99-Central Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated 8th July, 1999];

(iii) No. 39/2001-Central Excise, dated the 31st July, 2001 [G.S.R. 565 (E), dated the 31st July, 2001];

(iv) No. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated the 14th November, 2002];

(v) No. 57/2002-Central Excise, dated 14th November, 2002 [G.S.R.. 765(E), dated the 14th November, 2002];

(vi) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513 (E), dated the 25th June, 2003]; [OMITTED - and ]

(vii) No. 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R. 717 (E), dated the 9th September, 2003]:

(viii) No.20/2007-Central Excise, dated the 25th April, 2007 [G.S.R. 307 (E), dated the 25th April, 2007]; and  [OLD - [ GSR 307 (E), dated the 25th April, 2007]. ]

(ix) No. 1/2010-Central Excise, dated the 6th February, 2010 [G.S.R. 62 (E), dated the 6th February, 2010].

(In above sub-rule (4), in second proviso,  in item (vI) the word "and" - omitted, in item (viii) the brackets, letters, figures and words "[G.S.R. 307 (E), dated the 25th April, 2007]; and" - substituted, and item (ix) - inserted  vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 )

(In Rule 12A, item (viii) has been inserted at sub-rule (1) & (4) vide NTF. NO. 32/2007-CE(N.T.), DT. 03/08/2007)

(5) A large taxpayer shall submit a monthly return, as prescribed under these rules, for each of the registered premises.

(6) Any notice issued but not adjudged by any of the Central Excise officer administering the Act or rules made thereunder immediately before the date of grant of acceptance by the Chief Commissioner of Central Excise, Large Taxpayer Unit, shall be deemed to have been issued by Central Excise officers of the said Unit.

(7) Provisions of these rules, in so far as they are not inconsistent with the provisions of this rule shall mutatis mutandis apply in case of a large taxpayer.

(Above rule 12A has been inserted vide NTF. NO. 19/2006-CE(N.T.), DT. 30/09/2006)

12AA: Power to impose restrictions in certain types of cases.- Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or an exporter, may by a notification in the Official Gazette, specify the nature of restrictions including restrictions on utilization of CENVAT credit and suspension of registration in case of a dealer and type of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board".

(Above rule 12AAA has been substituted vide NTF. NO. 03/2012-CE (NT), DT. 12/03/2012)

[OLD- 12AA. Power to impose restrictions in certain types of cases.- Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or an exporter, may by a notification in the Official Gazette, specify nature of restrictions including restrictions on utilization of CENVAT credit and suspension of registration in case of a dealer and type of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board. ]

(Above rule 12AA has been inserted vide NTF. NO. 31/2006-CE(N.T.), DT. 30/12/2006)

12AAA: Power to impose restrictions in certain types of cases.-

Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, registered importer first stage and second stage dealer provider of taxable service or an exporter, may by a notification in the Official Gazette, specify the nature of restrictions including restrictions on utilization of CENVAT credit and suspension of registration in case of an importer or a dealer and type of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board.

(In above rule 12AAA the words "registered importer" & "an importer or" has been inserted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(In above rule 12AAA the words "“provider of taxable service" has been inserted vide NTF. NO. 25/2014-CE (NT), DT. 25/08/2014)

(Above rule 12AAA has been vide NTF. NO. 15/2014-CE (NT), DT. 21/03/2014)

13. Power of Central Government to notify goods for deemed CENVAT credit.-

Notwithstanding anything contained in rule 3, the Central Government may, by notification, declare the input or input service on which the duties of excise, or additional duty of customs or service tax paid, shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in that notification and allow CENVAT credit of such duty or tax deemed to have been paid in such manner and subject to such conditions as may be specified in that notification even if, in the case of input, the declared input, or in the case of input service, the declared input service, as the case may be, is not used directly by the manufacturer of final products, or as the case may be, by the provider of output service [OLD- taxable service ], declared in that notification, but contained in the said final products, or as the case may be, used in providing the taxable service.

(In above rule 13 the words "output service" has been substituted vide NTF. NO. 28/2012-CE (NT), DT. 20/06/2012)

14. Recovery of CENVAT credit wrongly taken or erroneously refunded. –

(1) (i) Where the CENVAT credit has been taken wrongly but not utilised, the same shall be recovered from the manufacturer or the provider of output service, as the case may be, and the provisions of section 11A of the Excise Act or section 73 of the Finance Act, 1994 (32 of 1994), as the case may be, shall apply mutatis mutandis for effecting such recoveries;

(ii) Where the CENVAT credit has been taken and utilised wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer or the provider of output service, as the case may be, and the provisions of sections 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, 1994, as the case may be, shall apply mutatis mutandis for effecting such recoveries.

[OMITTED - (2) For the purposes of sub-rule (1), all credits taken during a month shall be deemed to have been taken on the last day of the month and the utilisation thereof shall be deemed to have occurred in the following manner, namely: -

(i) the opening balance of the month has been utilised first;

(ii) credit admissible in terms of these rules taken during the month has been utilised next;

(iii) credit inadmissible in terms of these rules taken during the month has been utilised thereafter.]

(Above sub-rule (2) of Rule 14 has been omitted vide NTF. NO. 13/2016-CE (NT), DT. 01/03/2016 )

(Above rule 14 has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

[OLD- 14. Recovery of CENVAT credit wrongly taken or erroneously refunded.-

Where the CENVAT credit has been taken and utilised wrongly [OLD- taken or utilized wrongly ] or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and 11AA [OLD- and 11AB ] of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries. ]

(In Rule 14 the words "taken and utilised wrongly" & "and 11AA" has been substituted vide NTF. NO. 18/2012-CE (NT), DT. 17/03/2012 wef 17/03/2012)

15. Confiscation and penalty.-

(1) If any person, takes or utilises CENVAT credit in respect of input or capital goods or input services, wrongly or in contravention of any of the provisions of these rules, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty in terms of clause (a) or clause (b) of sub-section (1) of section 11AC of the Excise Act or sub-section (1) of section 76 of the Finance Act (32 of 1994), as the case may be.  [OLD- not exceeding the duty or service tax on such goods or services, as the case may be, or two thousand rupees, whichever is greater.]

(In above sub-rule (1) the words, brackets, figures and letters "in terms of clause (a) or clause (b) of sub-section (1) of section 11AC of the Excise Act or sub-section (1) of section 76 of the Finance Act (32 of 1994), as the case may be" has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(2) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of clause (c), clause (d) or clause (e) of sub-section (1) of section 11AC of the Excise Act.  [OLD- section 11AC of the Excise Act.]

(In above sub-rule (2) the words, brackets, figures and letters "clause (c), clause (d) or clause (e) of sub-section (1) of section 11AC of the Excise Act." has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(3) In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made thereunder with intent to evade payment of service tax, then, the provider of output service shall also be liable to pay penalty in terms of the provisions of sub-section (1) of section 78 [OLD- penalty in 78] of the Finance Act.

(In above sub-rule (3) the words, brackets, figures and letters "penalty in terms of the provisions of sub-section (1) of section 78" has been substituted vide NTF. NO. 06/2015-CE (NT), DT. 01/03/2015 )

(4) Any order under sub-rule (1), sub-rule (2) or sub-rule (3)shall be issued by the Central Excise Officer following the principles of natural justice.

(Above Rule 15 has been substituted vide NTF. NO. 06/2010-CE(N.T.), DT. 27/02/2010)

[OLD-
15. Confiscation and penalty.-

(1) If any person, takes CENVAT credit in respect of input or capital goods, wrongly or in contravention of [OLD-without taking reasonable steps to ensure that appropriate duty on the said input or capital goods has been paid as indicated in the document accompanying the input or capital goods specified in rule 9, or contravenes] any of the provisions of these rules in respect of any input or capital goods, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention has been committed, or two thousand rupees [OLD-ten thousand rupees], whichever is greater.

(2) In a case, where the CENVAT credit in respect of input or capital goods has been taken or utilized wrongly on account of fraud, willful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Excise Act or the rules made thereunder with intention to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Excise Act.

(3) If any person, takes CENVAT credit in respect of input services, wrongly or in contravention of any of the provisions of these rules [OLD- without taking reasonable steps to ensure that appropriate service tax on the said input services has been paid as indicated in the document accompanying the input services specified in rule 9, or contravenes any of the provisions of these rules ] in respect of any input service, then, such person, shall be liable to a penalty which may extend to an amount not exceeding two thousand rupees [OLD-ten thousand rupees ].

(4) In a case, where the CENVAT credit in respect of input services has been taken or utilized wrongly by reason of fraud, collusion, willful mis-statement, suppression of facts, or contravention of any of the provisions of the Finance Act or of the rules made thereunder with intention to evade payment of service tax, then, the provider of output service shall also be liable to pay penalty in terms of the provisions of section 78 of the Finance Act.

(5) Any order under sub-rule (1), sub-rule (2), sub-rule (3) or sub-rule (4) shall be issued by the Central Excise Officer following the principles of natural justice.]

(In rule 15, in sub-rule (1) the words "in contravention of" & "two thousand rupees", in sub-rule (3) the words "in contravention of any of the provisions of these rules"& "two thousand rupees" has been substituted vide NTF. NO. 10/2007-CE(N.T.), DT. 01/03/2007)

15A. General penalty.-

Whoever contravenes the provisions of these rules for which no penalty has been provided in the rules, he shall be liable to a penalty which may extend to five thousand rupees.

(Rule 15A. has been inserted vide NTF. NO. 10/2008-CE(N.T.), DT. 01/03/2008 w.e.f. 1st day of March, 2008)

16. Supplementary provision.-

(1) Any notification, circular, instruction, standing order, trade notice or other order issued under the CENVAT Credit Rules, 2002 or the Service Tax Credit Rules, 2002, by the Central Government, the Central Board of Excise and Customs, the Chief Commissioner of Central Excise or the Commissioner of Central Excise, and in force at the commencement of these rules, shall, to the extent it is relevant and consistent with these rules, be deemed to be valid and issued under the corresponding provisions of these rules.

(2) References in any rule, notification, circular, instruction, standing order, trade notice or other order to the CENVAT Credit Rules, 2002 and any provision thereof or, as the case may be, the Service Tax Credit Rules, 2002 and any provision thereof shall, on the commencement of these rules, be construed as references to the CENVAT Credit Rules, 2004 and any corresponding provision thereof.

(Above sub-rule (2) has been inserted vide NTF. NO. 24/2004-CE(N.T.), DT. 17/09/2004)

(Please refer NTF. NO. 32/2006-CE(N.T.), DT. 30/12/2006)
 

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