some points of discussion on exsice laws
This query is : Resolved
18 June 2010
Dear Sir,
plz answer the few questions on excise:-
1. what will be the treatment of Cenvat credit availed on input services and capital goods used for the production of final goods which are exempted by a notificatin subsequently?
2. if exempted goods exported to EOU and Cenvat credit taken on inputs, then, will the cenvat credit taken be reversed?
3.which returns are filed by Input service provider, First stage dealer and second stage dealer?
4.what is the accounting treatment of cenvat credit available unutilised at the year end?
Plz answer my questions with relevant Rules and Case laws?
thank you.
plz answer the few questions on excise:-
1. what will be the treatment of Cenvat credit availed on input services and capital goods used for the production of final goods which are exempted by a notificatin subsequently?
2. if exempted goods exported to EOU and Cenvat credit taken on inputs, then, will the cenvat credit taken be reversed?
3.which returns are filed by Input service provider, First stage dealer and second stage dealer?
4.what is the accounting treatment of cenvat credit available unutilised at the year end?
Plz answer my questions with relevant Rules and Case laws?
thank you.
19 June 2010
FOE BEST ANSWER USE THE FOLLOWING LINKS
http://www.dateyvs.com/budget04_dire.htm
FOE BEST ANSWER USE THE FOLLOWING LINKS
http://www.dateyvs.com/budget04_dire.htm
30 June 2010
nobody is there who can answer this question?
25 July 2025
Here are some key discussion points on **Excise Laws** related to your questions, with references to relevant rules and case laws where applicable:
---
### 1. Treatment of Cenvat Credit on Inputs/Services/Capital Goods Used for Production of Goods Later Exempted by Notification
* **Rule:** According to **Cenvat Credit Rules, 2004**, if the final product becomes exempt subsequently, the Cenvat credit taken on inputs, input services, and capital goods related to those goods must be reversed.
* **Explanation:** When goods are exempted, Cenvat credit related to inputs, capital goods, and input services used in producing those goods cannot be utilized against output excise duty.
* **Case law:** *CCE vs. Zuari Industries Ltd.* (2011) - The Supreme Court held that credit reversal is mandatory where inputs are used for exempted goods.
---
### 2. Export of Exempted Goods to EOU (Export Oriented Unit) and Cenvat Credit Reversal
* **Rule:** As per Notification No. 48/2012-Central Excise (dated 6.7.2012), if exempted goods are exported to an EOU, **Cenvat credit availed on inputs and input services is required to be reversed**.
* **Reason:** Since export of exempted goods is treated as exempt supply, the credit taken cannot be retained.
---
### 3. Returns Filed by Input Service Provider, First Stage Dealer, and Second Stage Dealer
* **Input Service Provider:** Files **Service Tax Returns (STR)** in Form ST-3 on a half-yearly basis (now GST has replaced service tax in most cases).
* **First Stage Dealer:** Files **Excise Returns** (e.g., ER-1 or ER-2) monthly or quarterly depending on turnover and excise notifications.
* **Second Stage Dealer:** Usually the manufacturer who clears the goods files the **Manufacturer’s Excise Returns** and also maintains proper records for Cenvat credit.
---
### 4. Accounting Treatment of Unutilised Cenvat Credit at Year-End
* **Accounting treatment:**
* The unutilised Cenvat credit is shown as **Current Asset** in the balance sheet (under ‘Cenvat Credit Receivable’ or similar head).
* It does not form part of revenue but is an asset to be adjusted against future excise duty liability.
* If credit is unutilised for a long time, it may require write-off or reversal subject to department’s scrutiny.
* **Rule:** Rule 6(5) of Cenvat Credit Rules allows the carry forward of unutilised credit.
---
### Summary Table
| Query | Rule/Act | Case Law/Notes |
| ----------------------------------- | ----------------------------------- | ------------------------------------ |
| Cenvat credit on exempted goods | Cenvat Credit Rules, 2004, Rule 3 | *CCE vs. Zuari Industries* |
| Export of exempted goods to EOU | Notification No. 48/2012-C.E. | Credit reversal mandatory |
| Returns by service/input providers | Service Tax Rules/Form ST-3 | GST replaced Service Tax (post 2017) |
| Unutilised Cenvat credit accounting | Accounting Standards / Cenvat Rules | Shown as Current Asset |
---
If you want, I can help draft detailed notes with exact rule quotations or case citations. Would you like me to?
---
### 1. Treatment of Cenvat Credit on Inputs/Services/Capital Goods Used for Production of Goods Later Exempted by Notification
* **Rule:** According to **Cenvat Credit Rules, 2004**, if the final product becomes exempt subsequently, the Cenvat credit taken on inputs, input services, and capital goods related to those goods must be reversed.
* **Explanation:** When goods are exempted, Cenvat credit related to inputs, capital goods, and input services used in producing those goods cannot be utilized against output excise duty.
* **Case law:** *CCE vs. Zuari Industries Ltd.* (2011) - The Supreme Court held that credit reversal is mandatory where inputs are used for exempted goods.
---
### 2. Export of Exempted Goods to EOU (Export Oriented Unit) and Cenvat Credit Reversal
* **Rule:** As per Notification No. 48/2012-Central Excise (dated 6.7.2012), if exempted goods are exported to an EOU, **Cenvat credit availed on inputs and input services is required to be reversed**.
* **Reason:** Since export of exempted goods is treated as exempt supply, the credit taken cannot be retained.
---
### 3. Returns Filed by Input Service Provider, First Stage Dealer, and Second Stage Dealer
* **Input Service Provider:** Files **Service Tax Returns (STR)** in Form ST-3 on a half-yearly basis (now GST has replaced service tax in most cases).
* **First Stage Dealer:** Files **Excise Returns** (e.g., ER-1 or ER-2) monthly or quarterly depending on turnover and excise notifications.
* **Second Stage Dealer:** Usually the manufacturer who clears the goods files the **Manufacturer’s Excise Returns** and also maintains proper records for Cenvat credit.
---
### 4. Accounting Treatment of Unutilised Cenvat Credit at Year-End
* **Accounting treatment:**
* The unutilised Cenvat credit is shown as **Current Asset** in the balance sheet (under ‘Cenvat Credit Receivable’ or similar head).
* It does not form part of revenue but is an asset to be adjusted against future excise duty liability.
* If credit is unutilised for a long time, it may require write-off or reversal subject to department’s scrutiny.
* **Rule:** Rule 6(5) of Cenvat Credit Rules allows the carry forward of unutilised credit.
---
### Summary Table
| Query | Rule/Act | Case Law/Notes |
| ----------------------------------- | ----------------------------------- | ------------------------------------ |
| Cenvat credit on exempted goods | Cenvat Credit Rules, 2004, Rule 3 | *CCE vs. Zuari Industries* |
| Export of exempted goods to EOU | Notification No. 48/2012-C.E. | Credit reversal mandatory |
| Returns by service/input providers | Service Tax Rules/Form ST-3 | GST replaced Service Tax (post 2017) |
| Unutilised Cenvat credit accounting | Accounting Standards / Cenvat Rules | Shown as Current Asset |
---
If you want, I can help draft detailed notes with exact rule quotations or case citations. Would you like me to?
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