Helpful for CA, CMA,CS November/ December 2015 Exams

2. Duties / Taxes Levied Under
(a)Basic Excise Duty (BED)
levied on Excisable Goods,
and Additional Duty
equivalent to BED levied on
imported goods.
First Schedule of Central Excise
Tariff Act.
(b) Special Excise Duty (SED)
levied on Excisable Goods
and additional Duty equal to
SED levied on imported
goods.
Second Schedule of Central
Excise Tariff Act.

3. c) Additional duty of Excise
levied on goods of special
importance like Sugar and
Tobacco. Duty in respect of
imported goods is also eligible
for credit.
Section 3 of Additional Duties of
Excise (Textile and Textile
Articles) Act, 1978 / Additional
Duties of Excise (Goods of
Special Importance) Act, 1957.
d) National Calamity Contingent
Duty (NCCD) on certain
excisable goods and imported
goods.
Section 136 of Finance Act, 2001
e) Education Cess levied on
Excisable and Imported Goods
Section 91/93 of Finance (No.2)
Act, 2004
f) Additional Duty of Excise on
Pan Masala & Certain tobacco
products.
Section 85 of Finance Act, 2005

4. g)Service Tax leviable on
Taxable Services
Section 66 of Finance Act,
1994
h) Education Cess leviable on
Taxable Services
Section 91/95 of Finance
(No.2) Act, 2004
i) Additional Duty Leviable
on specified goods
Section 3 of Customs Tariff
Act.
j) Secondary and Higher Education
Cess leviable on Excisable
Goods
Sections 136 / 138 of Finance Act,
2007
h) Secondary and Higher
Education Cess on Taxable
Services
Sections 136 / 138 of Finance Act,
2007

5.  Additional Duty leviable u/s 3(5) of Customs
Tariff Act, 1975
 CENVAT Credit shall not be utilized for
payment of Clean Energy Cess payable in
respect of clearances of specified goods
 CENVAT Credit of Basic Excise Duty if it is
paid on any goods in respect of which the
benefit of an exemption
 CENVAT Credit of Additional Customs
Duty(ACT) u/s 3 paid on Import Ships, Boats
and other Floating structures---up to 85%

6.  “Manufacturer” or “Produce” includes the
Principal Manufacturer, who is liable to pay
the Excise Duty, even if he does not actually
produce such goods –
 Articles of Jewellery / other articles of
Precious Metals
 Articles of apparel (whether knitted or not)
and other made-up textile articles

7.  First Stage Dealer [Rule 2(ij)]
 Purchases the goods under an invoice
directly from-
 Manufacturer
 Importer… or
 Their consignment Agent, Depot
etc.
 Second Stage Dealer [Rule 2(s)]
 … A Dealer who purchases goods from First
Stage Dealer

8.  Final Products means Excisable Goods
manufactured or Produced from Input or
using input service [Rule 2(h)]
 It also includes Waste and Scrap generated
during manufacturing Process
 Output Service means any service provided
by a Provider of Service located in taxable
territory

10. Chapter Goods Covered
82 Tools, Implements, Cutlery, Spoons and Fork and their parts
of base metal.
84 Nuclear Reactors, boilers, Machinery and Mechanical
Appliances and their parts.
85 Electrical Machinery, Equipment including their parts. Sound
Recorders and Reproducers, Television Image & Sound
Recorders and Reproducers, and their parts and accessories.
90 Optical, Photographic, Cinematographic, Measuring,
Checking, Precision, Medical or Surgical Instruments and
Apparatus including their parts.

11. Chapter Goods Covered
Heading
6805
Natural or Artificial Abrasive Powder or
Grain on the base of a textile material /
Paper / Paper Board.
Heading
6804
Grinding Wheels and the like.

12.  Pollution Control Equipment including
their Components, Spares and
Accessories,
 Moulds, Dies, Jigs and Fixtures,
 Refractories and Refractory materials,
 Tubes, Pipes and Fittings thereof,
 Storage Tank,

13.  Motor Vehicles and their chassis
 Dumpers and Tippers
 Credit of the Capital Goods is also allowable
to Provider of Output Service.
 Capital Goods which are used outside the
factory of Manufacturer of Final Products for
generation of electricity for captive use within
the factory shall be eligible for CENVAT Credit

14.  Motor Vehicle designed for transportation of
goods/used for –
 Providing an Output Service of renting of
such Motor Vehicle; or
 Transportation of Inputs and Capital Goods
used for providing an Output Service; or
 Providing an Output Service of Courier
Agency

15.  Motor Vehicle designed to carry
passengers-
 Transportation of passengers or
 Renting of such Motor Vehicle, or
 Imparting motor driving skills
 Components, Spares and Accessories of
Motor Vehicles, Dumpers or Tippers used to
provide taxable services

17.  All goods used in the factory by the
Manufacturer of the final product, or
 Any goods including accessories, cleared
along with the final product, the value of
which is included in value of final product,
 Goods used for providing free warranty for
final products, or
 All goods used for generation of electricity or
steam for captive use, or
 All goods used for providing any Output
Service

18.  Light Diesel Oil, High Speed Diesel Oil or
Motor Spirit, (commonly known as Petrol),
 Any goods used for –
 Construction of a Building or a Civil
Structure or a part thereof, (or)
 Laying of Foundation / Structures to
support Capital goods
 Capital Goods
 Motor Vehicles

19.  Any goods,
 such as food items,
 goods used in a guesthouse,
 residential colony,
 club or a recreation facility and
 clinical establishment,
 when such goods are used primarily for
personal use or consumption of any
employee ………and
 Any goods which have NOT relationship with
the manufacture of a final product

21.  Any service used (directly/indirectly) in
relation to-
Manufacture of goods
Clearance of Final Products upto place
of removal

22.  Any service used for provision of
output service

23.  Input service includes services used in
relation to –
 Setting up, Modernization, Renovation or
Repairs of –Factory,
 Premises of Output Service Provider, or
 An office relating to such Factory or Premises,
 Advertisement or Sales Promotions,
 Market Research,
 Storage up to the place of Removal,
 Procurement of Inputs,

24.  Accounting
 Auditing
 Coaching and Training
 Computer Networking
 Credit Rating
 Financing

25.  Inward transportation of Inputs or Capital
Goods
 Outward Transportation upto the place of
removal
 Recruitment and Quality Control
 Share Registry and Security

26.  Service Portion in the execution of a works
contract and construction services in so far
as they are used for –
o Construction of a building or a civil structure
or a part there4of, or
o Laying of foundation / structures for support
of capital goods,

27.  Services of General Insurance, Servicing and
repairs and Maintenance in relation to Motor
Vehicles, Which do not qualify as Capital
Goods. However credit shall be available in
respect of these services to –
 Manufacturers, in respect of Motor Vehicles
manufactured by them.
 Insurance Companies, in respect of Motor
Vehicles insured and re-insured by them.

28.  Outdoor Catering
 Beauty Treatment
 Health Services
 Cosmetic and Plastic Surgery
 Club Membership
 Health and Fitness Centres
 Life Insurance, Health Insurance and
 Travel Benefits to employees on vacation such
as Leave or Home Travel Concession

30.  means excisable goods which are exempt
from the whole of the Excise Duty leviable
thereon, and includes goods which are
chargeable to “Nil” Rate of duty and Goods in
respect of which benefit of exemption is
availed

31.  Taxable Services which are exempt from the
whole of the Service Tax leviable thereon,
 Services on which no Service Tax is leviable
u/s 66B of the Finance Act, 1994 and
 Taxable Services whose part of value is
exempted based on the condition that No
CENVAT Credit shall be taken on inputs and
input services , used for providing such
taxable service

33. Item Eligibility Reasoning
1. High Speed Diesel
oil
Not eligible Excluded from the
definition of Inputs
u/r 2(k).
2. Parts used to
manufacture
Capital Goods
within the Factory
Eligible Inputs include all
goods used in the
Factory, and which
has relationship with
production [Rule
2(k)]
3. Light Diesel oil
used to generate
electricity
consumed within
the Factory
Not eligible Excluded from the
definition of Inputs
under Rule 2(k).

34. 4.Steel Sheets used
to erect a
Storage Tank.
Not Eligible Inputs exclude
goods for laying of
foundation /
structures to
support Capital
Goods. [rule 2(k)]
5.Safety appliances
used by Workmen
Eligible Inputs include all
goods used in the
Factory, and which
has relationship with
production Rule
2(k)]
6.Dies Eligible Dies are Capital
Goods u/r 2(a).
Hence , they are
eligible for CENVAT
Credit as CG, and not
as Inputs.

35. 7.Detergent used for
washing glass
bottles, before
filling aerated
water, by Soft
Drink Manufacturer,
in his bottling plant.
Eligible Inputs include all
goods used in the
Factory, and which has
relationship with
production [Rule
2(k)].
8.Cement and Paints
used for maintaining
Factory Building
Not Eligible Inputs include all goods
used in the Factory, and
which has relationship
with production [Rule
2(k)]. Since such goods
have not direct
connection with
production, it is not
eligible.

36. 9.Pollution Control
Equipment and
their spares
Eligible Pollution Control Equipments
and their spares are Capital
Goods under Rule 2(a). Hence,
they are eligible for CENVAT
Credit as Capital Goods.
10.Storage Tank Eligible Storage Tanks are Capital
Goods under Rule 2(a).
Hence, they are eligible for
CENVAT Credit as Capital
Goods.
11.Equipments
used in Office
Not Eligible Capital Goods does not
include equipment or
appliance used in an office. If
used by a service provider for
service, Eligible.

37. 12.Paints used for
packing
material
Eligible Packing Material
used is eligible
for CENVAT
Credit.
13.Lubricating Oil Eligible The definition of
inputs includes
Lubricating Oils.
14.Service Tax paid
on Audit Fees
Eligible Definition of input
service under Rule
2(1) includes
auditing service.

39.  CENVAT Credit may be utilized for payment
of –
 Excise Duty on removal of Final Products,
Inputs, Semi-Processed Goods and Capital
Goods.
 Amount under Rule 16(2) of Central Excise
Rules, 2002, i.e. removal of re-conditioned
and repaired goods.
 Service Tax.

40.  Cut-Off Time for Utilizing Credit: CENVAT
Credit available as on the last day of
the Month / Quarter can be utilized
for payment of Service Tax / Duty for
that month / quarter

41.  Example…For April, A Ltd has CENVAT
credit of `50,000. The Service tax/duty
payable is `75,000 (to be paid on or before
May 5th).
 Credits to CENVAT Account between 1st to
5th May is ` 10,000.
 In this case, the credit for April is restricted
to ` 50,000.
 The subsequent credits of ` 10,000 before
the due date of payment, cannot be
claimed as credit for the month of April

42.  Restriction on utilization [Rule 3(7)]
 Additional Excise Duty (Textile and Textile
Articles)
 National Calamity Contingency Duty [NCCD]
 EC on Excisable Goods / Taxable Services
 SHEC on Excisable Goods / Taxable Services
 Additional Excise Duty leviable u/s 157 of the
Finance Act, 2003 and 85 of Finance Act,
2005.
 Additional Excise Duty leviable u/s 85 of the
Finance Act, 2005.
 Additional Duty leviable u/s 3 of the Customs
Tariff Act, 1975

43.  Utilised only for payment of the respective
duty on…..
 Removal of Final Product, Input or Semi-
Processed Input.
 Providing any Output Service.

44.  Additional Customs Duty cannot be claimed
as credit against Service tax payable on
taxable service

46.  Place of Receipt of Input---i.e.,Factory
 Inputs Received in Place other than Factory--
-the Supreme Court has held that the credit
on explosives used for blasting mines to
produce limestone in manufacture of cement
is eligible as input, even if mines are situated
away from the Factory
 Case : Madras Cements Ltd

47.  CENVAT Credit is allowed even if Inputs are
used outside the Factory, but Capital Goods
should necessarily be used within the factory.
 For a Service Provider, any inputs used for
providing Output Service is available as
Credit.
 It is not necessary that the same must be
used within the Registered Premises of the
Output Service Provider.

49.  Approving Authority: DCCE/ACCE having
jurisdiction over the Factory of a
Manufacturer of the final products
 Permission:
 Nature of Permission: AC / DC may permit (by
order) to store duty paid Inputs (which have
been claimed as CENVAT Credit), outside the
Factory.
 Considerations: AC / DC will consider the
following factors for grant of permission –
 Nature of goods,
 Shortage of storage space.

50.  Conditions: The AC/DC may specify such
conditions and limitations as they deem fit
while granting permission.
 Consequences of non-compliance: If the
Input is not used as per the rules, the
Manufacturer should pay an amount equal to
the credit availed in respect of such input.

52.  Receipt: Input should be received in Factory
of the Manufacturer or Premises of Output
Service Provider.
 Delivery: Service Provider to take credit of
Inputs or Capital Goods whenever the goods
are delivered to him, subject to maintenance
of documentary evidence of their delivery and
location.

53.  Time of Credit: Credit can be taken
immediately on receipt of inputs in the
Factory / Service Providing Premises.
 Amount of Credit: Credit can be claimed on
duties paid on inputs received as shown in
the Invoice of the Supplier.

54.  Nexus with production / Service: Inputs
should be used in relation to manufacture, or
used directly for provision of taxable output
service.
 No responsibility for duty payment: The
person availing CENVAT Credit is not
responsible to ensure that duty paid to
Manufacturer of Inputs or Capital Goods has
been deposited by such Manufacturer.

55.  No CENVAT Credit for Buyer of fully exempt
goods:
 If a Manufacturer collects Excise Duty on fully
exempt goods, then such Excise Duty cannot
be claimed by the Buyer of such goods as
CENVAT Credit, since it does NOT qualify as
“Duty of Excise” as per CENVAT Credit Rules,
2004.
 However, the above Excise Duty collected by
the Manufacturer shall be remitted by him to
the Central Government

57.  Situation: Where Inputs / Capital Goods
(before their usage) are written off in the
books of accounts either fully / partially or
provision is made to write off fully / partially
 Consequences : The Manufacturer should
pay an amount equivalent to the CENVAT
Credit taken in respect of the said Input or
Capital Goods.

58.  Subsequent use: If the Input / Capital Goods
is subsequently used in the manufacture of
Final Products, the Manufacturer can take the
credit of the CENVAT Credit paid earlier
 Partial Write off: Reversal is required only if
full write off is made in the books of
accounts. So no reversal is required if only
part of the value is written off.

59.  Writing off of Work in progress (WIP)
 Situation 1
 If such WIP has reached a stage, where it is
considered as Finished Goods
 Effect
 The duty has to be paid, unless it is remitted
for destruction u/r 21 of Central Excise Rules.

60.  Writing off of Work in progress (WIP)
 Situation 2
 Otherwise, WIP considered as Input
 Effect
 Input Credit on such WIP is to be reversed

62.  Under Rule 3(5C) of CENVAT Credit Rules,
2004, the Assessee is required to reverse the
CENVAT Credit availed in respect of inputs
used in relation to manufacture of final
products on which the duty liability has been
remitted

63. Capital Goods [Rule 4]
 Mode of Acquisition: Mode of acquisition of
Capital Goods is immaterial, Credit can be
availed, even if the Capital Goods are
acquired on Lease, Hire Purchase or Loan
Agreement, from a Financing Company

65. Quantum Time Condition
Upto 50% of
Duty Paid
At the time of receipt of goods in
the factory of Manufacturer /
Premises of the Output Service
Provider (See Exception)s
-
Balance Any of the subsequent Financial
Years
The Manufacturer /
Service provider should
be possession of the
Capital goods in such
subsequent years for
claiming credit.
100%  50% at the time of receipt of
the goods in the premises.
 50% at the time of removal.
Capital Goods are
received and cleared in
the same financial year.

66.  Exception to General Restriction of 50%: SSIs
– 100% CENVAT Credit on Capital Goods in
the first year.
 An Assessee who is eligible to avail of the
exemption under a notification based on
value of clearances in a financial year is
allowed to CENVAT Credit in respect of
Capital Goods of the whole amount of duty
paid on such Capital Goods in the same
financial year

67.  CENVAT Credit on Capital Goods received
outside the factory of the Manufacturer of the
Final Products for generation of electricity for
captive use within the Factory, shall be
limited upto 50% in the same financial year,
and balance credit in the subsequent financial
years

68.  CENVAT on Capital Goods cannot be availed
if used exclusively in –
 Manufacture of dutiable goods on which
concessional rate is availed,
 Provision of Service whose part value is
exempted on the condition that no credit of
inputs and input services is taken

70.  Invoice Basis: CENVAT Credit in respect of
Input Service shall be allowed, on or after the
day on which the Invoice Bill / Challan
referred is received.
 Payment within 3 Months: If the amount of
the Invoice is not paid within 3 months, then
the credit availed on Invoice Basis shall be
reversed.
 If the amount is however paid subsequently,
then such credit can again be availed.

71.  Return of Payment:
 If any payment made towards an Input
Service is refunded, or a Credit Note is
received by the Manufacturer / Service
Provider who has taken credit, he shall pay an
amount equal to the CENVAT Credit availed in
respect of the amount so refunded / credited.

72.  Time of Payment of Amounts:
 Any amount payable under this Rule shall be
paid by debiting the CENVAT Credit or by
payment on or before the 5th day of the
following month / quarter, except for the
month / quarter ending March, when the
payment is to be made on or before 31
March. In case of failure to pay, the amounts
can be recovered under Rule 14.

73.  Reverse Charge:
 In case of an Input Service where the Service
Tax is paid on reverse charge by the Recipient
of the service, the CENVAT Credit in respect
of such Input Service shall be allowed on or
after the day on which the Service Tax is paid

75.  Definition [Rule 2(m)] : Input Service
Distributor is an office of a Manufacturer /
Service Provider which receives all invoices for
taxable services consumed, and makes
payment against such invoices
 It then distributes the credit of Service Tax
paid to different units, which actually
provides taxable service / manufactures
excisable goods

76.  Input Service Distributor should issue a duly
signed Invoice or Bill or a challan in respect of
credit distributed for each of the recipient of
such credit

77.  Contents – Details of credit received and
distributed during that period
 Form – Details should be submitted in Form
ST-3
 Time Limit- Last day of the month following
the month in which it relates …i.e., 31st
October / 30th April
 Submitted to -Jurisdictional Superintendent
of Central Excise

79.  Distribution – the ISD may distribute the
CENVAT credit in respect of the Service Tax
paid on the Input Service, to its
manufacturing units or units providing output
service
 Conditions –
 The credit distributed should not exceed the
amount of Service tax paid thereon
 The credit of Service Tax attributable to
service used in a unit exclusively engaged in
manufacture of exempted goods of providing
of exempted services shall not be distributed

80.  Conditions …–
 The credit of Service Tax attributable to
service used wholly in a unit shall be
distributed only to that unit
 The credit of Service Tax attributable to
service used in more than one unit shall be
distributed pro-rata on the basis of the
Turnover during the previous month/quarter
of the concerned unit, to the sum total of the
Turnover during the previous month/quarter
of all the units to which the service relates

82.  Duty paid on Inputs/Capital Goods..can
be distributed in case of Premises or Office of
the Output Service Provider
 Hence, an Output Service Provider can take
credit on inputs and Capital Goods received
based on an Invoice /Bill/Challan issued by
an office or Premises (Input Credit
Distributor) of the Output Service Provider
,which receives invoices, towards purchases
of Inputs and Capital Goods

83.  Provisions relating to First and Second
Stage Dealer shall apply to such office or
Premises

85.  Consequences of Removal of Input Goods
from the premises of the Output Service
Provider…..
 Reversal of Credit: where Inputs are removed
from the Service provider’s Premises , without
being used in providing output services ,
credit availed should be reversed

86. Removal of Capital Goods :…credit
availed should be reversed
Removal of Capital Goods after
Usage:…credit availed should be
reversed on a percentage basis….

89.  CENVAT credit shall be allowed even if any
inputs or capital goods as such or after being
partially processed are sent to job worker for
 Further processing
 Testing
 Repair
 re-conditioning etc..
 Goods should be received in the factory
within 180 days

92.  For both Inputs and Input Services (used in
relation to manufacture of dutiable Final
Products and Output Services)
 CREDIT AVAILABLE…
 For Capital Goods , Inputs and Input Services

93.  Option A:
 Pay 6% of value of Exempted Goods/services..
 Avail…Full credit

94.  Option B:
 Avail…Full credit INITIALLY…but apply
principles of provisional payment and Year
End Adjustment for credit attributable to
Exempt Final products and Services

95.  Option C:
 For INPUTS…
 Maintain separate accounts and avail credit
 For INPUT SERVICES
 Follow option B

98.  All Exports on or after 1st April 2012
 Refund:
 Maximum Amount reversed =
Export Turnover of (Goods+Services) divided
by Total Turnover multiplied by Net CENVAT
credit

99.  Submit refund claim only one claim in
a quarter
 However if a person exports Goods
and Services simultaneously…may
submit 2 claims in a quarter

103.  CENVAT credit can be taken only if all are
contained in the said document

104.  Manufacturer should submit a monthly return
within 10 days from the close of each month
 If availing exemption – 20 days
 First Stage Dealer /Second Stage Dealer ..
 15 days
 Service Provider /Input Service Distributor –
submit ST-3 , within 1 month from the close
of half year