Amends CENVAT Credit Rules to allow availment of credit on the tax payment challan in case of payment of service tax by the service receiver.

The major amendments are:

(i) CENVAT Credit on motor vehicles has been liberalized. CENVAT credit on motor vehicles, other than those falling under tariff heading 8702, 8703, 8704, 8711 and their chassis, would be allowed. The credit of service tax paid on their hiring, insurance and repair will also be allowed.

(ii) Rule 4(1) and 4(2) has been amended to allow a service provider to take credit of inputs or capital goods as soon as the goods are delivered to him, subject to specified conditions.

(iii) A simplified scheme for refunds of unutilized credit on account of exports has been introduced by substituting old Rule 5 with a new one. The correlation or nexus between exports and input services used in such exports would not be required under such substituted rule.

(iv) Changes have been made in Rule 7 relating to distribution of credits of input services by an input service distributer (ISD). This is to ensure their scientific allocation to only such units where they have been put to use and proportionate to turnover.

(v) Rule 10A has been inserted to permit transfer of unutilized credit of SAD lying in balance at the end of each quarter to another factory of the manufacturer.

Notification No. 18/2012 – Central Excise (N.T.)

Dated- 17th March, 2012

G.S.R. (E).- 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), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely : –

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.

2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 2, —

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