Background: Vide Notification No. 8/2015-C.E. (N.T.), dated March 1, 2015, the following provisos were added to Rule 11(2) of the Central Excise Rules, 2002 (the Excise Rules)
“Provided also that if the goods are sent directly to any person on the direction of the Registered dealer, the invoice shall also contain the details of the registered dealer as the buyer and person as the consignee, and that person shall take Cenvat credit on the basis of the registered dealer’s invoice.
Provided also that if the goods imported under the cover of a bill of entry are sent directly to buyer’s premises, the invoice issued by the importer shall mention that goods are sent directly from the place or port of import to the buyer’s premises.”
In view of the newly inserted provisos, some field officers took the view that whoever orders goods to the Manufacturer and directs the Manufacturer to send the goods to ultimate user directly are required to take “Dealer’s” Registration. They insisted that Cenvat credit will not be allowed on the strength of Manufacturer’s invoice when the goods are sold through a Non-Registered Dealer.
This view was also endorsed recently by the Joint Commissioner, Office of the Principal Chief Commissioner of Central Excise, Mumbai Zone-I, who clarified that since Cenvat credit will be available on Registered Dealers’ Invoice, hence registration of Dealer with Central Excise is must from March 1, 2015.
Laudable Clarification issued by the CBEC:
The Central Board of Excise and Customs (“the CBEC” or “the Board”) vide Circular No. 1003/10/2015-CX dated May 5, 2015 (“the Circular”) has clarified that the new provisos are meant to improve the ease of doing business by providing an additional facility to the Registered Dealer or Importer for direct dispatch of goods from the manufacturer to the consignee, when he is issuing Cenvatable invoice. They do not withdraw any past facility. These amendments should therefore be harmoniously interpreted with the existing Rules and Circulars in conformity with the legal provisions, keeping the intention of the Government in mind.
The Board has clarified as under:
“(i) Where a registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. In such cases no Cenvatable invoice shall be issued by the registered dealer in favour of the consignee though commercial invoice can be issued. Where a registered dealer negotiates sale of goods from the total stock ordered on a manufacturer or an importer to multiple buyers and orders direct transportation of goods to the consignees and the manufacturer or the importer is willing to issue individual invoices for each sale in favour of the consignees for such individual sale, the same procedure shall apply.
(ii) Where a registered dealer negotiates sale by splitting a consignment procured from a manufacturer or a registered importer and issues Cenvatable invoices for each of the sale, it would now be possible for the dealer to order direct transport of the consignments as per the individual sales to the consignee without bringing the goods to his godown. This would save time and transportation cost for the dealer adding to ease of doing business. This is a new facility which flows from the amended provisions. Procedure as prescribed in the third proviso of rule 11(2) shall be applicable in such case.
(iii) Where a un-registered dealer negotiates sale of an entire consignment from a manufacturer or a registered importer and orders direct transport of goods to the consignee, credit can be availed by the consignee on the basis of invoice issued by the manufacturer or the registered importer. As the dealer is not registered, there is no question of issuing any Cenvatable invoice by him. Such dealers as in the past can continue to be un-registered.
(iv) Where goods are sold by the registered importer to an end-user (say a manufacturer) who would avail credit on the basis of importer’s invoice and the goods are transported directly from the port or warehouse at the port to the buyer’s premises, the amendment prescribes that for such movement the factum of such direct transport to the buyer’s premises needs to be recorded in the invoice.”
The above stated clarification has not only brought a sigh of relief for the Dealers, but has also granted additional benefits like direct transport in case of split consignments, an appreciating move of the CBEC towards “Ease of doing business”.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: email@example.com)