Draft Circular Date 23/05/2006

Amendment to rule 9 of the the CENVAT Credir Rules, 2004
Kind attention is invited to rules 9(3) of the CENVAT Credit Rules, 2004, which prescribes the reasonable steps required to be taken by the buyer to ensure that the input or capital goods or input service in respect of which he has taken 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. Reasonable steps are clarified by way of an explanation to the said rule. However it has been observed that the reasonable steps as envisaged in the rule are not practical or easy of compliance. Hence the Board is considering the proposal to redraft the rule so that the conditions imposed on such purchaser/receiver are practicable and easy of compliance.

2. In this regard, attention is invited to rule 9(2) of the CENVAT Credit Rules which states that the department cannot deny credit to the assessee if certain details such as 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 are available on the document on which credit is availed. It is felt that the department recognizes these to be the critical details, which are required to be available on the document prior to taking of such credit. A suggestion has been submitted before the Board that instead of amending rule 9(3) to lay down reasonable steps for the purchaser/receiver of taxable goods/ services, rule 9(2) may be amended by placing the responsibility on the purchaser/receiver of taxable goods/services of the input or capital goods or input service in respect of which he has taken the CENVAT credit to ensure that these critical details relating duty or service tax paid or payable, description and value of the goods or taxable service, name and address of the factory or warehouse or provider of input service, and the name of the purchaser/receiver of the goods/taxable service are available on the document on which credit is taken.

3. The Board desires that this proposal may be examined and your views/comments on the proposed amendment to the CENVAT Credit Rules, 2004 may be sent urgently to the undersigned.

F.No. 267/18/2006-CX-8

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