CENVAT Credit cannot be utilised for Swachh Bharat Cess

February 03, 2016

CBEC vide its notification no. 02/2016-Central Excise (N.T.) dated February 03, 2016 has provided that the CENVAT credit of any duty specified in rule 3(1) shall not be utilised for payment of the Swachh Bharat Cess. [proviso shall be inserted in rule 3(4) after the sixth proviso]

In the said notification it is also clarified that sales promotion includes services by way of sale of dutiable goods on commission basis. [Explanation inserted, in rule 2, in clause (l), after sub-clause (C)] This explanation overruled the decision of Hon’ble High Court of Gujarat (COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD – II Versus M/s CADILA HEALTHCARE LTD) in which the credit of commission agent’s services has denied.

Notification no. 02/2016-Central Excise (N.T.) dated February 03, 2016

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION

No. 02/2016-Central Excise (N.T.)

New Delhi, the 3^rd February, 2016

G.S.R.—(E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely :

(1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2016.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the CENVAT Credit Rules, 2004 (here-in-after referred to as the said rules), in rule 2, in clause (l), after sub-clause (C), the following Explanation shall be inserted, namely:-

Explanation.-For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis..

3. In the said rules, in rule 3, in sub-rule (4), after the sixth proviso, the following proviso shall be inserted, namely:

“Provided also that the CENVAT credit of any duty specified in sub-rule (1) shall not be utilised for payment of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015):”.

[F. No. 332/18/2015-TRU ]

(K. Kalimuthu)
Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification No. 23/2004 – Central Excise (N.T.), dated the 10^th September, 2004 vide number G.S.R. 600(E), dated the 10^th September, 2004 and last amended vide notification No. 01/2016 – Central Excise (N.T.), dated the 1^st February, 2016, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 132(E), dated the 1^st February, 2016.