|
|
![]() |
|
|
Amend Credit Rules retrospectively for clearances to SEZ Developers It is learnt that Empowered Group of Ministers in its meeting held on 24th October 2008 has decided that the Department of Revenue should amend CENVAT Credit Rules 2004 to ensure that the benefit of non-reversal of CENVAT credit is not denied to the domestic manufacturing units in case of supplies made from DTA to SEZ Developers but till date no such amendment has been issued. The delay in issue of clarificatory amendment in credit rules has resulted in unwarranted litigation at a time when SEZ Projects are already heading for a slowdown. Though Finance Ministry is already seized of the matter but how much time it will take in decision making is anybody’s guess. It is high time that a retrospective clarificatory amendment is done by the Ministry to include “SEZ Developer” in the term “SEZ Unit” used in Rule 6 (6) of CENVAT Credit Rules so that the dust is settled on the issue. Though clearances from a Domestic manufacturing unit to SEZ Units and SEZ Developers are treated at par and the benefit of deemed export is admissible in both the cases; the Central Excise Department has slapped notices to hundreds of manufacturers asking them to reverse CENVAT Credit at the rate of 10 per cent on clearances made to SEZ Developers as there is an anomaly in existing CENVAT Credit Rules. Rule 6 of CENVAT Credit Rules provides for obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services and the the CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule ( 2 ) and (3)which provide that the manufacturer of goods shall pay an amount equal to ten per cent. of value of the exempted goods Sub-rule (6) provides as under: “(6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred per cent. export-oriented undertaking; or (iii) cleared to a unit in an (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95-Central Excise, dated the 28th August, 1995, number G. S R. 602 (E), dated the 28th August, 1995; or (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or (vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under section 3 of the said Customs Tariff Act when imported into India and supplied against International Competitive Bidding in terms of notification No. 6/2002-Central Excise dated the 1st March, 2002 or notification No. 6/2006-Central Excise dated the 1st March, 2006, as the case may be.” Though the intention of the Government is to allow benefits at par to SEZ Units and Developers; the excise authorities go for their own interpretation which is more favourable for them. Though Hon’ble Finance Minister is very busy being PM; it is expected a decision to grant benefit with retrospective effect will soon be taken on the issue |
|
| Copyright ©
2006 allindiantaxes.com | All rights reserved website designing India & CMS development: Softlogics & Developments |