Only Cenvat Credit Balance can be used for Payment of Arrears
[CBEC Circular No. 962 dated 28th March 2012]
Subject: Payment of
arrears from Cenvat Credit earned at a later date
Reference was received from the field formation
seeking clarification on the issue as to whether the arrears of duty can be
paid by utilizing the cenvat credit which has accrued
subsequent to the period to which the arrears pertained. Such clarification has
been sought in view of first proviso to rule 3(4) of the Cenvat
Credit Rules, 2004. As per this proviso, “while
paying duty of excise or service tax, as the case may be, the cenvat credit shall be utilized only to the extent such
credit is available on the last day of the month or quarter, as the case may be,
for payment of duty or tax relating to that month or the quarter, as the case
may be.”
2. Doubts
have been raised whether these restrictions will be applicable to duty payable
in terms of Section 11A or duty paid after due date in terms of rule 8 of the
Central Excise Rules, 2002.
3. The matter
has been examined in the Board. Practice ascertained from field formations
points out that in majority of cases the payment of demands confirmed under
Section 11A are being permitted to be paid by utilizing cenvat
credit without linking the same to the period to which these demand pertain.
4. A
harmonious reading of rule 8 of Central Excise Rules’ 2002 and first proviso to
rule 3 (4) of the Cenvat Credit Rules, 2004 indicates
that the restriction with regard to the utilization of cenvat
credit is relating to the normal payment of duty in terms of rule 8 of the
Central Excise Rules, 2002, where duty for a particular month or quarter is to
be discharged by the 5th of the next month. For this proviso, the cenvat credit allowed to be used is what was in balance on
the last date of that month or quarter and not what accrued thereafter. Even in
case of duty paid late in terms of rule 8, the credit available for utilization
will remain same i.e. the credit in balance on the last date
of month or quarter, as the case may be.
5. Further
duty payable under rule 8 is on a different footing from duty payable under
Section 11A. Duty under Rule 8 is paid
after self determination by the assessee
unlike Duty payable under Section 11A where generally the duty is determined by
the Central Excise officer and the payment is mandated after such
determination. There is no time limit
prescribed under Section 11A i.e., monthly or quarterly unlike the date
prescribed under Rule 8 (i.e., 5th of the next month). Therefore, the restriction on the utilization
of the cenvat credit accruing subsequent to the last
date of the month or quarter in which the arrears arise,
is not applicable to the demands confirmed under Section 11A of the Central
Excise Act, 1944.
6. Trade & Industry as well as field
formations may be suitably informed.
7. Receipt
of this circular may kindly be acknowledged.
F.No.267/96/2009-CX8