Time limit to take credit under cenvat credit rules.

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.

where the assessee receives the service provider’s invoice on October 31, 20X4 which is dated October 01, 20X4. As per the amended Rule 4(1) the assessee can claim the input service tax till March 31, 20X5. Suppose he claims the credit on October 31st itself. Now, as per Rule 4(7) the assessee shall be required to make payment by December 31, 20X4. In case the assessee fails to make the payment to service provider, he shall be required to reverse the credit of input service tax so taken.

But in Budget 2015 Amendments in the CENVAT Credit Rules, 2004 Time limit for taking CENVAT credit on inputs and input services enhanced from the present 6 months to one year [Rule 4].