Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
Circular No. 911 /01 /2010-CX
New Delhi dated the 14th January, 2010
To,
All Director Generals,
All Chief Commissioners of Central Excise (including LTU),
All Commissioners of Central Excise (including LTU).
Sir/ Madam,
Subject: Irregular availment of Cenvat credit on certain activities not
amounting to manufacture-reg.
Reference has been received from field formations stating that though certain
activities including connectorising, testing, repacking and relabeling of feeder
cables, cutting of HR/CR coils into sheets or slitting into strips do not amount
to manufacture, such processors are taking Cenvat credit and justifying their
Cenvat availment on ground that they are paying duty on final products.
- The matter has been examined. As per the provisions of Rule 3 of the CENVAT
Credit Rules, 2004, read with Rule 6, credit of duty paid on the inputs is
allowed only if these inputs are used in the manufacture of a final product. The
Board vide circular dated 26.09.07 issued from F.No.93/1/2005-CX3, had clarified
that if the process does not amount to manufacture, duty is not required to be
paid and hence no Cenvat credit of duty paid on inputs is admissible. Attention
is also invited to the provisions of Section 5B of the Central Excise Act, 1944,
where an assessee, who has paid excise duty on a product under the belief that
the same is excisable, but subsequently the process of making the said product,
is held by the Court as not amounting to manufacture, in such cases, the Central
Government may issue an order for non-reversal of such credit in past cases.
- In view of above, following instructions are issued:-
(i) In cases where the process undertaken by an assessee indisputably does not
amount to manufacture, the department should inform the assessee about the
correct legal position and advise him not to pay duty and not to avail credit on
inputs.
(ii) If the assessee has already paid duty, and in a situation where there is no
manufacture as held by the Courts subsequently, and facts of the case are
covered by the provisions of Section 5B of the Central Excise Act, 1944, the
assessee is at liberty to approach the Central Govt. for issue of appropriate
notification for regularization of the Cenvat credit availed.
- Trade & Industry as well as field formations may be suitably informed.
- Receipt of this circular may kindly be acknowledged.
- Hindi version will follow.
Yours faithfully,
(Amish Kumar Gupta)
OSD (CX-8)
F.No.267/116/2009-CX8