There is good news for the traders selling items of value exceeding Rs. 25,000/- per piece, which are sold under the brand name of the manufacturer / principal manufacturer and where such items are identifiable as a distinct number such as chassis of a car etc.
GST council on 4th June 2017 introduced “Draft Rule for issue of Credit Transfer Document (CTD) to be inserted in the CENVAT Credit Rules, 2004 for transfer of Cenvat credit paid on specified goods available with a trader as on appointed date.”
Trader having such CTD may claim tax credit of duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985.
Rule 9 of the CENVAT Credit Rules, 2004 shall be also amended to include Credit Transfer Document in the list of documents using which credit can be availed subject to the condition that such Credit Transfer Document is issued after the appointed date and within thirty days of the appointed date.
Conditions to issue such CTD.
- Manufacturer issuing such CTD has to registered be under Central Excise Act, 1944 .
- The value of such goods must be higher than rupees twenty five thousand per piece.
- Such goods must bear the brand name of the manufacturer or the principal manufacturer.
- Such goods must be identifiable as a distinct number such as chassis / engine no. of a car.
- Verifiable records of clearance and duty payment relatable to each piece of such goods must be maintained by the manufacturer and should made available for verification on demand by a Central Excise officer.
Liability of Manufacturer issuing CTD.
- The manufacturer issuing CTD must be satisfied that the dealer to whom CTD is issued is in possession of such manufactured goods in the form in which it was cleared by him.
- Such CTD shall be issued within 30 days of the appointed date and copy of the corresponding invoices shall be enclosed with the CTD
- CTD shall not be issued in favour of a dealer to whom invoice was issued for the same goods before the appointed date.
- In case on the basis of CTD issued by a manufacturer, the credit of central tax is availed twice on the same goods under GST, such manufacturer shall be jointly and severally responsible for excess credit availed by the dealer and provisions for recovery of credit, interest and penalty under the CENVAT Credit Rules, 2004 shall apply mutatis-mutandis on such manufacturer.
- A manufacturer issuing a CTD shall submit details thereof in table 1 of TRANS 3 within sixty days of the appointed date.
- A manufacturer issuing a CTD shall maintain record in the form TRANS 3A and such record shall be made available to the Central Excise officer for verification on demand.
Duties of Trader
- Copies of all invoices relating to buying and selling from manufacturer to the dealer, through intermediate dealers, shall be maintained by the dealer availing credit using CTDs.
- Such dealer shall not be eligible to avail credit under provision of rule 1(4) of Transition Rules made under CGST Act, 2017 on identical goods manufactured by the same manufacturer available in the stock of the dealer. (to avoid double claims, in case you avail the credit on some goods on the basis of CTD, you cannot claim 60% or 40% of Cenvat credit in form TRAN-01.)
- The dealer availing credit on the basis of CTD shall, at the time of making supply of such goods, mention the corresponding CTD number in the invoice issued by him under section 31 of the CGST Act, 2017.
- The dealer availing credit on the basis of CTD shall, submit details thereof in table 2 of TRANS 3 on common portal within sixty days of the appointed date.
- The dealer availing credit on the basis of CTD shall, maintain record in the form TRANS 3B and such record shall be made available to the Central Excise officer for verification on demand.
Features of CTD
The CTD shall be serially numbered and shall contain:
- Central Excise registration number.
- Address of the concerned Central Excise Division.
- Name, address and GSTIN number of the person to whom it is issued.
- Description of goods.
- Classification of goods.
- Invoice number with date of removal.
- Mode of transport and vehicle registration number.
- Rate of duty on such goods.
- Quantity of goods.
- Value of goods.
- Duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 paid thereon.
Some relevant facts:
It is only draft rules and not the final one.
It has come very late i.e. only 3 weeks left.
There are stringent conditions for manufacturer issuing CTD, so he may not issue such CTD in most of the cases.
Click here to download form GST Trans-03, GST Trans-3A & GST Trans-3B.
Suggestions are invited at firstname.lastname@example.org
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Invoice Format Under GST