Cenvat credit a matter of policy

CHATROOM

You can certainly purchase OTS cans against Form 'H'. In your shipping bill, please give the description as 'Fruit Pulp packed in OTS cans' and indicate the number of cans.

Once you are able to establish the number of cans exported with the number of cans purchased, there need be no difficulty. It is not necessary to export empty containers, as your sales tax authorities seem to suggest as that is not practical. Packing fruit pulp in the OTS cans that you purchase and exporting the fruit pulp in the containers bought against Form 'H' is very much in order.

We have cleared some goods without CVD payment under DEPB. We have taken Cenvat credit of the same. The central excise audit team wants us to show the authority under the Cenvat credit rules on the basis of which we can take the credit. We said that the exemption notification 89/2005-cus. dated 4.10.2005 allows us to take the credit but they want us to show the provisions under the central excise law.

You may refer your audit team to the circular no 22/2006 dated 13.10.2006 issued by the Central Board of Excise and Customs. It says that in response to the query as to whether rule 3 of Cenvat credit rules should be amended to allow Cenvat credit of CVD paid through DFCE scrips, the ministry of law has observed that "it is more a matter of policy and legal administration instead of interpretation, on which views may differ. However, it would be preferable to have scheme-specific concessions in the relevant specific notification as against general amendment to the rules, which may be amenable to wider than intended interpretation."

The circular further clarifies that the additional customs duty paid in cash or through debit in certificate issued under DFCE/Target Plus Scheme can be availed of as Cenvat credit or duty drawback and that for reasons mentioned in paragraph 4 above, amendment of the Cenvat credit rules, 2004 is not required for the purpose.

Although the circular is issued in connection with queries relating to CVD debited to duty credit certificates issued under the Target Plus scheme or DFCE scheme, the principle is well established that if the customs exemption notification allows you to take the Cenvat credit, you may do so even if Cenvat Credit Rules do not so provide.

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