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TO BE PUBLISHED IN PART H, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY. DATED THE 31st MARCH. 2000†
11,CHAITRA 1922 ( SAKA)

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

***

New Delhi, dated the 31st March. 2000
11Chaitra,1922(Saka)

NOTIFICATION
No. 27 /2000-Central Excise (N.T.), dated 31-3-2000.

††††††† In exercise of the powers conferred by section 37 of the Central Excise Act,1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following rules to amend the Central Excise (Second Amendment) Rules.2000.

1. These rules may be called the Central Excise [Second Amendment ( Amendment)] Rules, 2000.

2. In the Central Excise (Second Amendment) Rules, 2000, for rule 5, the following rule shall be

substituted, namely:-

'5. For rules 57A to 57V of the said rules, the following rules shall be substituted with effect from the 1st day of April, 2000, namely:-

"AA. CREDIT OF DUTY PAID ON EXCISABLE GOODS USED AS INPUTS OR CAPITAL GOODS

57AA. Definitions. - For the purpose of this section,-

(a) "capital goods" means-

(i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Central Excise Tariff Act, 1985;

(ii) components, spares and accessories of the goods specified at (i) above;

(iii) moulds and dies;

(iv) refractories and refractory materials;

(v) tubes and pipes and fittings thereof, used in the factory; and

(vi) pollution control equipment, used in the factory of the manufacturer of the final products.†

Explanation. - For removal of doubts, it is hereby clarified that "capital goods" do not include any equipment or appliances used in an office.

(b) "exempted goods" means goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty;

(c) "final products" means excisable goods manufactured or produced from inputs, except matches;

(d) "input" means all goods, except high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not, and includes accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used for manufacture of final products or for any other purpose, within the factory of production, and also includes lubricating oils, greases, cutting oils and coolants.

Explanation.- The high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. 

57AB. CENVAT credit. - (1) A manufacturer or producer of final products shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of,-

(i) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said First Schedule), leviable under the Act;

(ii) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985, leviable under the Central Excise Act, 1944 in relation to the goods falling under sub-heading Nos. 2401.90, 2404.99, 5402.20, 5402.32, 5402.42, 5402.43, 5402.52, 5402.62, 8415.00, 8702.10, 8703.90, 8706.21 and 8706.39 of the said First Schedule;

(iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act,1978 (40 of 1978);

(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); and

(v) the additional duty leviable under section 3 of the Customs Tariff Act, 1975, equivalent to the duty of excise specified under clauses (i), (ii),(iii) and (iv) above, paid on any inputs or capital goods received in the factory on or after the first day of April, 2000.

Explanation.- For removal of doubts it is clarified that the manufacturer of the final product shall be allowed CENVAT credit of additional duty leviable under section 3 of the Customs Tariff Act 1975 (51 of 1975) on goods falling under Chapter heading No. 98.01 of the First Schedule to the said customs Tariff Act.

(b) The CENVAT credit may be utilized for payment of any duty of excise on any final product manufactured by the manufacturer or for payment of duty on inputs or capital good themselves if such inputs are removed as such or after being partially processed, or such capital goods are removed as such Explanation. - When inputs or capital goods are removed from the factory, the manufacturer of the final products shall pay the appropriate duty of excise leviable thereon as if such inputs or capital goods have been manufactured in the said factory, and such removal shall be made under the cover of an invoice prescribed under rule 52A.

(2) Notwithstanding anything contained in sub-rule (1)-

(a) credit of duty in respect of inputs or capital goods produced or manufactui (i) in a free trade zone and used in the manufacture of the final products in any other place in† India; or

(ii) by a hundred per cent export-oriented undertaking or by a unit in an Electronic Hardware Technology Park or Software Technology Parks and used in the manufacture of the final products in any place in India, shall be restricted to the extent which is equal to the additional duty leviable on like†goods under section 3 of the Customs Tariff Act, 1975 paid on such inputs;

(b) credit in respect of-

(i) the additional duty of excise under section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978);

(ii) the additional duty of excise under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); and

(iii) the additional duty under section 3 of the Customs Tariff Act, 1975, equivalent to the duty of excise specified under clauses (a) and (b) above
shall be utilized only towards payment of duty of excise leviable under the said Additional duties of Excise (Textiles and Textile Articles) Act, or under the said Additional Duties of Excise (Goods of special Importance) Act, on any final products manufactured by the manufacturer or for payment of such duty as inputs themselves if such inputs are removed as such or after being partially processed

(c) CENVAT credit of the duty paid on the inputs shall not be allowed in respect of texturised yarn (including draw-twisted or draw-wound yarn) of polyesters falling under heading No. 54.02 of the said First Schedule, manufactured by an independent texturiser, that is to say, a manufacturer engaged in† manufacture of texturised yarn (including draw-twisted or draw-wound yarn) of polyesters falling under heading No. 54.02, who does not have the facility in his factory (including plant and machinery) for manufacture of partially oriented yarn of polyesters falling under sub-heading No. 5402.42 of the said First Schedule.

Explanation. - Where the provisions of any other rule or notification provide for grant of partial or full exemption on condition of non-availability of credit of duty paid on any input or capital goods, the provisions of such other rule or notification shall prevail over the provisions of the rules made under this section.

57AC. Conditions for allowing CENVAT credit- (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer.

(2) (a) The CENVAT credit in respect of capital goods received in a factory at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent of the duty paid on such capital goods in the same financial year.

(b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, provided that the capital goods are still in the possession and use of the manufacturer of final products in such subsequent years.

(c) CENVAT credit may also be taken in respect of such capital goods as have been received in the factory, but have not been installed, before the 1st day of April, 2000 subject to the condition that during the financial year 2000-2001, the credit shall be taken for an amount not exceeding fifty per cent. of the duty paid on such capital goods.

Illustration.- A manufacturer received machinery on April 16, 2000 in his factory. CENVAT of two lakh rupees is paid on this machinery. The manufacturer can take credit upto a maximum of one lakh rupees in the financial year 2000-2001, and the balance in subsequent years.

(3) The CENVAT credit in respect of duty paid on the capital goods shall be allowed to a manufacturer even if the capital goods are acquired by the manufacturer on lease, hire purchase or loan agreement, from a financing company.

(4) The CENVAT credit in respect of capital goods shall not be allowed in respect of that part of the value of capital goods which represents the amount of duty on such capital goods, which the manufacturer claims as depreciation under section 32 of the Income-tax Act, 1961 (43 of 1961).

(5) (a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning or any other purpose, and it is established from the records, challans or memos or any other document produced by the assessee availing the CENVAT credit that the goods are received back in the factory within 180 days of their being sent to a job worker. If the inputs or the capital goods are not received back within 180 days, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise. However, the manufacturer can take the CENVAT credit again when the inputs or capital goods are received back in his factory.

(b) CENVAT credit shall also be allowed in respect of moulds and dies sent by a manufacturer of final products to a job worker for the production of goods on his behalf and according to his specifications.

(6) The Commissioner of Central Excise having jurisdiction over the factory of the manufacturer of the final products who has sent the inputs or partially processed inputs outside his factory to a job-worker may, by an order in each removal of such inputs or partially processed inputs, and subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid, allow finished goods to be cleared from the premises of the job-worker.

(7) Where any inputs are used in the final products which are cleared for export under bond or used in the intermediate products cleared for export, the CENVAT credit in respect of the inputs so used shall be allowed to be utilized by the manufacturer towards payment of duty of excise on any final products cleared for home consumption or for export on payment of duty and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to such safeguards, conditions and limitations as may be specified by the Central Government by notification in the Official Gazette. No refund of credit shall, however, be allowed if the manufacturer avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under rule 12, in respect of such duty.

57AD. Obligation of manufacturer of dutiable and exempted goods.- (1) CENVAT credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods, except in the circumstances mentioned in sub-rule (2).

(2)Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be used as fuel, and manufactures such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods. The manufacturer, opting not to maintain separate accounts shall follow either of the following conditions, as applicable to him, namely:-

(a) if the exempted goods are,-

(i) final products falling under Chapters 50 to 63 of the Schedule to the Central Excise Tariff Act, 1985 ;

(ii) tyres of a kind used on animal drawn vehicles or handcarts and their tubes, falling within Chapter 40;

(iii) black and white television sets, falling within Chapter 85;

(iv) newsprint, in rolls or sheets, falling within Chapter heading No.48.01, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to inputs used in or in relation to the manufacture of such final products at the time of their clearance from the factory, or

(b) if the exempted goods are other than those described in clause (a) above, the manufacturer shall pay an amount equal to eight per cent. of the total price, excluding sales tax and other taxes, if any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the time of their clearance from the factory.

Explanation.- The amount mentioned in (a) and (b) above shall be paid by the manufacturer by debiting the CENVAT credit or otherwise.

(3) No credit of the specified duty shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods (other than final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year).

(4) The provisions of sub- rule (1), sub-rule (2) and sub-rule (3) shall not be applicable in case the exempted goods are either,-

(i) cleared to a unit in a free trade zone; or

(ii) cleared to a hundred per cent. Export-oriented undertaking; or

(iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Parks; or

(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 Excises, dated 28th August, 1995; or

(v) cleared for export under bond in terms of the provisions of rule 13.

57AE. Documents and accounts.- (1) The CENVAT credit shall be taken by the manufacturer on the basis of any of the following documents, namely :- 

(a) an invoice issued by a manufacturer of inputs or capital goods under rule 52A or 52AA or rule 100E from his factory or from his depot or from the premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer;

(b) a bill of entry;

(c) an invoice issued by a first stage dealer of excisable goods under rule 52AA;

(d) an invoice issued by a second stage dealer of excisable goods under rule 52AA;

(e) an invoice issued by an importer under rule 52AA;

(f) an invoice issued by an importer from his depot or from the premises of the consignment agent of the said importer provided the said depot or the premises, as the case may be, is registered under rule 174;

(g) an invoice issued by a first stage or second stage dealer of imported goods registered under rule 174;

(h) an invoice issued by a manufacturer of final products for clearance of inputs or capital goods as such.†

Explanation. - For the purposes of this section,- 

(i) "first stage dealer" means a dealer who purchases the goods directly from-

(a) the manufacturer under the cover of an invoice issued under rule 52A or rule 100E or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or

(b) an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice;

(ii) "second stage dealer" means a dealer who purchases the goods from a first stage dealer.

(2) (a) The manufacturer shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken the CENVAT credit are goods on which the appropriate duty of excise as indicated in the documents accompanying the goods, has been paid.

(b) The CENVAT credit in respect of inputs or capital goods purchased from a first stage or second stage dealer shall be allowed only if such dealer has maintained records indicating the fact that the inputs or capital goods were supplied from the stock on which duty was paid by the producer of such inputs or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him.

Explanation.- The provisions of the explanation under rule 173Q shall apply mutatis mutandis for the purpose of determining whether the manufacturer has taken reasonable steps as required by this sub-rule.

(3) The manufacturer of final products shall maintain proper records for the receipt, disposal, consumption and inventory of the inputs and capital goods in which the relevant information regarding the value, duty paid, the person from whom the inputs or capital goods have been purchased is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer taking such credit.

(4) The manufacturer of final products shall submit within five days from the close of each month to the Superintendent of Central Excise, a monthly return in the prescribed form.†

Explanation. - In respect of a manufacturer availing of any exemption based on the value or quantity of clearances in a financial year, the provisions of this sub-rule shall have effect in that financial year as if for the expression "month", the expression "quarter" was substituted.

57AF. Transfer of credit.- (1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory.

(2) The transfer of the CENVAT credit under sub-rule (1) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred alongwith the factory to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Commissioner.

57AG. Transitional provision.- (1) Any amount of credit earned by a manufacturer under rules 57A,57B or 57Q, as they existed prior to 1st day of April, 2000 and remaining unutilized on that day shall be allowable as CENVAT credit to such manufacturer under these rules, and be allowed to be utilized in accordance with these rules.

(2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been availing of the credit of the duty paid on inputs before such option is exercised, shall be required to pay an amount equivalent to the credit, if any, allowed to him in respect of inputs lying in stock or used in any finished excisable goods lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export.

(3) (a) An independent texturiser who has availed of the credit of duty paid on inputs used for manufacture of texturised yarn (including draw-twisted or draw-wound yarn) of polyesters falling under heading No. 54.02 of the said First Schedule shall be required to pay an amount equivalent to the credit, if any, allowed to him in respect of such inputs lying in stock, or used in the manufacture of texturised yarn (including draw-twisted or draw-wound yarn) of polyesters falling under heading No. 54.02 of the said First Schedule lying in stock as on the 1st day of March, 2000, or thereafter.

(b) An independent texturiser who manufactures texturised yarn (including draw twisted or draw-wound yarn) of polyesters falling under heading No. 54.02, and also other goods, shall be allowed to take CENVAT credit of the duty paid on inputs used for the manufacture of such other goods, lying in stock as on the 1st day of March, 2000 or received in his factory on or after the 1st day of March, 2000.

Explanation.- For the purposes of this sub-rule, 'independent texturiser' means a manufacturer engaged in the manufacture of texturised yarn (including draw-twisted or draw-wound yarn) of polyesters falling under heading No. 54.02 of the said First Schedule, and who does not have the facility in his factory (including plant and machinery) for manufacture of partially oriented yarn of polyesters falling under sub-heading no.† 5402.42 of the said First Schedule.

57AH. Recovery of credit wrongly taken. - (1) Where the CENVAT credit has been taken or utilised† wrongly, the same along with interest shall be recovered from the manufacturer and the provisions of sections 11A, 11AA and 11AB of the Act shall apply mutatis mutandis for effecting such recoveries.

(2) Where the CENVAT credit has been taken or utilized wrongly on account of fraud, willful misstatement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intention to evade payment of duty, then, the manufacturer shall also be liable to pay penalty and the provisions of section 11AC of the Act shall apply mutatis mutandis.

57AI. Credit of special excise duty. - Notwithstanding anything contained in these rules, a manufacturer of final products shall be allowed to take credit of the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985, leviable under the Central Excise Act, 1944 in relation to the goods falling under sub-heading Nos. 2401.90, 2404.99, 5402.20, 5402.32, 5402.42, 5402.43, 5402.52, 5402.62, 8415.00, 8702.10, 8703.90, 8706.21 and 8706.39 of me said First Schedule received in his factory on or after the 1st day of March, 2000.

57 AJ. Special dispensation in respect of inputs manufactured in factories locate of North East region. - Notwithstanding anything contained in these rules, where a manufacturer has cleared any inputs or capital goods, in terms of notification of the Government of lndia in the Ministry of Finance (Department of Revenue) No. 32/99- Central Excise, dated the 8th July, 1999, or notification no. 33/99- Central Excise, dated the 8th July, 1999, the CENVAT credit of duty paid on such inputs or capital goods shall be admissible as if no portion of the duty paid on such inputs or capital goods was exempted under any of the said notifications.

57AK. Power of Central Government to notify goods for deemed credit- Notwithstanding anything contained in rule 57AB, the Central Government may, by notification in the Official Gazette declare the inputs on which the duties of excise, or additional duty paid, shall be deemed to have been paid at such rate or equivalent to such amount as may be specified in the said notification and allow credit of such duty deemed to have been paid in such manner and subject to such conditions as may be specified in the said notification even if the declared inputs are not used directly by the manufacturer of final products declared in the said notification, but are costained in the said final products.".'.

3. In the Central Excise (Second Amendment) Rules, 2000, in rule 7, in sub-rule (i), in clause (1) (b),-

(i) for the words "shall discharge his duty liability by debiting such account-current" the words "shall discharge his duty liability by debiting such account-current or by utilising CENVAT credit" shall be substituted;

(a) after sub-clause (ii), the following sub-clause shall be inserted, namely,-

"(iii) at the end of each fortnight, the manufacturer shall determine the total amount of excise duty payable on the excisable goods removed during the fortnight, and he shall discharge the total duty liability so payable by making debit entry in the account current or by utilising CENVAT credit, as the case may be.".

(Sanjeev Sachdeva)
Deputy Secretary to Government of
India

F.No.B-4/5/2000-TRU 

 

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