Other Provision Cenvat Credit

Transfer of CENVAT Credit (Rule 10) – If a manufacturer of the final products shifts his factory to another
site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation,
lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such
factory, then, the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts
to such transferred, sold, merged, leased or amalgamated factory.

If a provider of output service shifts or transfers his business on account of change in ownership or on account
of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provision for
transfer of liabilities of such business, then, the provider of output service shall be allowed to transfer the
CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated
business.

The transfer of the CENVAT credit under sub-rules as stated above shall be allowed only if the stock of inputs
as such or in process, or the capital goods is also transferred along with the factory or business premises to the
new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted
for to the satisfaction of the Deputy Commissioner of Central Excise or, as the case may be, the Assistant
Commissioner of Central Excise.

Special dispensation in respect of inputs manufactured in factories located in specified areas of North East region, Kutch district of Gujarat, State of Jammu and Kashmir and State of Sikkim
Notwithstanding anything contained in these rules, where a manufacturer has cleared any inputs or capital
goods, in terms of notifications of the Government of India in the Ministry of Finance (Department of Revenue)
No. 32/99- Central Excise, dated the 8th July, 1999 [G.S.R. 508(E), dated the 8th July, 1999] or No. 33/99- Central
Excise, dated the 8th July, 1999 [G.S.R. 509(E), dated the 8th July, 1999] or No. 39/2001-Central Excise, dated the
31st July, 2001 [G.S.R. 565(E), dated the 31st July, 2001] or notification of the Government of India in the erstwhile
Ministry of Finance and Company Affairs (Department of Revenue) No.56/2002-Central Excise, dated the 14th
November, 2002 [G.S.R. 764(E), dated 14th November, 2002]or No.57/2002- Central Excise, dated the 14th
November, 2002 [ GSR 765(E), dated the 14th November, 2002] or notification of the Government of India in the
Ministry of Finance (Department of Revenue) No. 56/2003-Central Excise, dated the 25th June, 2003 [G.S.R. 513
(E), dated the 25th June, 2003] or 71/2003-Central Excise, dated the 9th September, 2003 [G.S.R.717 (E), dated the 9th September, 2003, the CENVAT credit on such inputs or capital goods shall be admissible as if no portion of the duty paid on such inputs or capital goods was exempted under any of the said notifications.

Power of Central Government to notify goods for deemed CENVAT credit (Rule 13)— Notwithstanding
anything contained in rule 3, the Central Government may, by notification, declare the input or input service on
which the duties of excise, or additional duty of customs or service tax paid, shall be deemed to have been paid
at such rate or equivalent to such amount as may be specified in that notification and allow CENVAT credit of
such duty or tax deemed to have been paid in such manner and subject to such conditions as may be specified
in that notification even if, in the case of input, the declared input, or in the case of input service, the declared
input service, as the case may be, is not used directly by the manufacturer of final products, or as the case may
be, by the provider of taxable service, declared in that notification, but contained in the said final products, or
as the case may be, used in providing the taxable service.

Recovery of CENVAT credit wrongly taken or erroneously refunded (Rule 14) –Where the CENVAT credit
has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or the provider of the output service and the provisions of sections 11A and
11AB of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such
recoveries.

Confiscation and penalty (Rule 15) – (1) If any person takes Cenvat Credit for inputs or capital goods
wrongly or without ensuring that appropriate duty on them has been paid or he contravenes any provisions of
the Cenvat Credit Rules in respect of any inputs or capital goods, then, all such goods shall be liable to
confiscation and such person shall also be liable for penalty not exceeding the duty on such goods or Rs. 10,000/
– whichever is greater.
(2) If Cenvat Credit is taken/utilised wrongly by fraud, wilful misstatement, collusion or suppres-sion of
facts etc., with intent to evade payment of duty, the manufacturer shall also be liable for penalty
under Section llAC of the Excise Act.
(3) Similar penal provisions would apply in respect of input services. In a case, where the CENVAT credit in
respect of input services has been taken or utilized wrongly by reason of fraud, collusion, willful misstatement,
suppression of facts, or contravention of any of the provisions of the Finance Act or of the
rules made there under with intention to evade payment of service tax, then, the provider of output
service shall also be liable to pay penalty in terms of the provisions of section 78 of the Finance Act.
(4) Any order of confiscation or penalty under Rule 15, shall be issued following the principles of natural
justice.

Supplementary provision (Rule 16) – Any notification, circular, instruction, standing order, trade notice or
other order issued under the CENVAT Credit Rules, 2002 or the Service Tax Credit Rules, 2002, by the Central
Government, the Central Board of Excise and Customs, the Chief Commissioner of Central Excise or the
Commissioner of Central Excise, and in force at the commencement of these rules, shall, to the extent it is
relevant and consistent with these rules, be deemed to be valid and issued under the corresponding provisions
of these rules, i.e Cenvat Credit Rules 2004.

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