Circular No. 845/03/2006-CX
F. No. 267/01/2006-CX-8
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
1st February, 2007
Subject: Simultaneous availment of Notification No.
30/2004-CE & 29/2004-CE both dated 9.7.2004 by the manufacturers of goods
falling under Chapter 50 to 63 of the CETA, 1985- regarding
Representations were received from trade and industry, as well as field
formations seeking clarification on the bove referred subject.
Notification No. 29/2004-CE dated 9.7.2004 permits clearance of goods at
concessional rates availing CENVAT Credit wherein a manufacturer can take
CENVAT Credit on inputs. Notification No. 30/2004-CE dated. 9.7.2004
permits a manufacturer to clear the goods at 'Nil' rate of duty without
availing CENVAT Credit on inputs. Further, Board's circular No.
795/28/2004-CX, dated 28.07.2004, issued by TRU had clarified that the
benefit of these two notifications can be availed simultaneously provided
the manufacturer maintains separate Books of Account for goods in respect
of which benefit of notification No. 29/2004-CE dated 9.7.2004 is availed
and similarly, for goods in respect of which benefit of notification No.
30/2004-CE dated 9.7.2004 is availed. However, it was brought to the
notice of the Board that in such cases, certain manufacturers did not
maintain separate accounts and availed credit on all the inputs.
Subsequently, they reversed the credit availed on such inputs utilized for
goods cleared under exemption notification No. 30/2004 as per the
provisions of Rule 6(3) of the CENVAT Credit Rules, 2004.
2. The issue has been examined. It is seen that proviso to notification
No. 30/2004-CE dated 9.7.2004 states that 'nothing contained in this
Notification shall apply to the goods in respect of which the credit of
duty on inputs has been taken under the provisions of the CENVAT Credit
Rules, 2004'. Therefore, it is clarified that non-availment of credit on
inputs is a precondition for availing exemption under this notification
and if manufacturers avail input tax credit, they would be ineligible for
exemption under this notification. Reversal of credit on a later date
would not suffice to make them eligible for this exemption.
3. However, it is seen that textile manufacturers/ processors have to use
common inputs, which are used in a continuous manner, and it may not be
practically possible to segregate and store inputs like dyes and chemicals
separately or maintain separate accounts . In such cases, in order to
facilitate simultaneous availment of the two notifications, such
manufacturers may be advised not to take credit initially and instead take
only proportionate input credit on inputs used in the manufacture of
finished goods cleared by him on payment of duty. Such proportionate
credit should be taken at the end of the month only. At the time of audit
of records, or at any other time if the department requires, the assessee
should support such credit availment with the relevant records maintained
by them showing input quantity used for the goods manufactured and cleared
on payment of duty. In case any subsequent verification reveals that such
proportionate credit taken is incorrect, the penal provisions as
prescribed under the law will be taken against such assessees.