| Date: |
28-04-2004
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| Notification No: |
Central Excise Circular No 783/2004
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| Issuing Authority: |
Central Excise
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| Type: |
Circular
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| File No: |
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| Subject: |
Treatment of Credit balance at the Year-end- regarding.
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I am directed to say that Board�s attention has been drawn to treatment of CENVAT credit balance lying unutilized at the end of the financial year in Income Tax returns by the manufacturers of excisable goods which would provide possibility of availing unintended double benefit both under Central Excise and Income Tax law.
2. It has been brought to the notice of the Board that in certain commodities, where there is accumulated CENVAT credit either due to inverted duty structure i.e. less duty on finished products and more duty on inputs/ raw materials, or due to other reasons, such accumulated/ unutilized credit lying in balance at the end of the financial year is claimed as expenditure and is debited to Profit and Loss account. At the same time, even after claiming the amount as expenditure for Income Tax purposes, the said amount is maintained in the CENVAT credit account which can be subsequently utilized for the purpose of payment of duty on any other finished goods manufactured by the same assessee or for any other purpose in accordance of Central Excise law. As there is no time limit to utilize the balance Cenvat credit and there is no one to one co-relation between the inputs and the finished products, such availment of double benefit may escape notice.
3. Accordingly, Board desires that field formations under your charge may be sensitized against the unintended dual benefit availed of by certain assessees on account of treatment of unutilized CENVAT credit balance at the year end. In case the CENVAT credit balance has been treated as expenditure in Profit and Loss account and has not been written off in Books of Accounts, the concerned Income Tax authorities should be suitably intimated. The audit parties should also keep this aspect in mind while conducting audit.
4. Receipt of the circular may be acknowledged.
5. Hindi version will follow.
Yours faithfully,
(Vijay Mohan Jain )
Under Secretary to the Govt. of India F.No. 267 /62/2003-CX-8
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