CBEC vide Notification No. 24/2016-Central Excise (N.T.), dated April 13, 2016 has provided following amendments in Rule 4(7) (Conditions for allowing CENVAT Credit) of CENVAT Credit Rules, 2004:

  • The manufacturer or the service provider shall not take CENVAT credit after 1 year of the date of issuance of invoice/ bill/ challan 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.
  • CENVAT Credit of service tax shall be spread evenly over a period of 3 years on the one-time charges payable in full up front or in installments for the service of assignment of the right to use any natural resource by the Government, local authority or any other person. Earlier vide Notification No. 13/2016-Central Excise (N.T.) dated, March 01, 2016, the CENVAT Credit had to be spread over the period for which the right to use was assigned.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No.  24/2016- Central Excise (N.T.)

New Delhi, the 13th April, 2016.

G.S.R. 422(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 (Fifth Amendment) Rules, 2016.

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

2. In the CENVAT Credit Rules, 2004 (hereinafter referred to as the said rules), in rule 4, in sub-rule (7), –

(i)    in the fifth proviso, after the words “documents specified in sub-rule (1) of rule 9”, 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” shall be inserted;

(ii)   for the sixth, seventh and eighth proviso, the following provisos shall be substituted, namely :-

“Provided also that CENVAT Credit of Service Tax paid in a financial year, on the one-time 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”.

3. In the said rules, in rule 6, in sub-rule (1), in Explanation 3, after the figures “1994”, the words “provided that such activity has used inputs or input services” shall be inserted.

[F. No. 334 / 8 /2016 -TRU]

(Mohit Tiwari)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, notification No. 23/2004 – Central Excise (N.T.), dated the 10th  September, 2004 vide, number G.S.R. 600(E), dated the 10th  September, 2004 and last amended, vide, notification No. 23/2016- Central Excise (N.T.), dated the  1st April, 2016  published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide, number G.S.R. 390(E) , dated the 1st April, 2016.

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One Comment

  1. unnikrishnan.v says:

    Pl note that para 3 of the Notification is missing.which would read as follows:-“3.In the said rules,i rule6 ,i subrule(1),in Explanation 3,after the figures”1994”,the words ‘provided that such activity has used inputs or input services”shall be inserted.
    The above omission has wide ramificationin pendingdisputes on reversal of cenvat credit for Fats sold after issue of occupancy certificates by muncipality/Corporation.

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