Cenvat credit utiliized

As per Rule 4(1) of the CENVAT Credit Rules, 2004 is proposed to be to amended with effect from September 1, 2014 to provide that the manufacturer or the service provider should avail of CENVAT credit of the duty paid on inputs or the service tax paid on input services, within 6 months from the date of the relevant document specified in Rule 9(1) of the CCR, 2004, eg. Invoice.

The proviso to Rule 4(7), in terms of which, the service recipient who has taken CENVAT credit on the basis of the receipt of the documents referred to rule 9(1) of the CCR, 2004 is required to reverse the credit if the payment is not made within 3 months of the date of the input invoice, etc.

A combined reading of these sub-rules of Rule 4 makes it clear that, the assessee needs to meet the following two conditions for availment of CENVAT credit, on a cumulative/parallel basis, viz.

++ Credit to be availed within 6 months of the date of the input invoice

++ While credit can be availed on receipt of the invoice pertaining to input service, payment will have to be effected within 3 months from the date of the invoice, failing which, the credit availed should be reversed.