Refund under Rule 5 of CENVAT Credit Rules, 2004 – Notification No. 27/2012-CX., (N.T.)

Refund of CENVAT Credit under Rule 5: Safeguards, Conditions and Limitations-Notification No. 27 /2012 Dated 18th June, 2012

Earlier, Refund of CENVAT credit available under Rule 5 of the CENVAT Credit Rules,2004 was governed by Notification No.5/2006-C.E (N.T)dated 14th March, 2006.This Notification has now been superseded by Notification No.27/2012-CX., (N.T.), dated 18th June,2012. The Notification prescribes the procedure in which Refund applications shall be filed and the conditions contained therein which need to be fulfilled. The same are discussed below.

Safeguards, conditions and limitations

Refund of CENVAT Credit under Rule 5 of the said Rules, shall be subjected to the fulfillment of the following conditions:-

(a) the manufacturer or provider of output service shall submit not more than one claim of refund under this rule for every quarter provided that a person exporting goods and service simultaneously, may submit two refund claims one in respect of goods exported and other in respect of the export of services every quarter.

(b) the value of goods cleared for export during the quarter shall be the sum total of all the goods cleared by the exporter for exports during the quarter as per the monthly or quarterly return filed by the claimant.

(c) the total value of goods cleared during the quarter shall be the sum total of value of all goods cleared by the claimant during the quarter as per the monthly or quarterly return filed by the claimant.

(d) in respect of the services, for the purpose of computation of total turnover, the value of export services shall be determined in accordance with clause (D) of sub-rule (1) of rule 5 of the said rules.

(e) for the value of all services other than export during the quarter, the time of provision of services shall be determined as per the provisions of the Point of Taxation Rules, 2011.

(f) the amount of refund claimed shall not be more than the amount lying in the books of the claimant at the end of quarter for which refund claim is being made or at the time of filing of
the refund claim, whichever is less.

(g) the amount that is claimed as refund under rule 5 of the said rules shall be debited by the claimant from his CENVAT credit account at the time of making the claim.

(h) In case the amount of refund sanctioned is less than the amount of refund claimed, then the claimant may take back the credit of the difference between the amount claimed and amount sanctioned.

Procedure for filing the refund claim-

(a) The manufacturer or provider of output service, as the case may be, shall submit an application in Form A to the Assistant/Deputy Commissioner of Central Excise as the case may be,

(b) The application in the Form A along with the enclosures contained therein shall be filed by the claimant, before the expiry of the period specified in section 11B of the Central Excise Act, 1944 (1 of 1944).

(c) The application for the refund shall be signed by

(i) the individual or the proprietor in the case of proprietary firm,

(ii) karta in case of Hindu Undivided Family,

(iii) partner in case of partnership firm;

(iv) person authorized by the Board of Directors in case of a limited company;and

(v) in any other case, a person authorized to sign the refund application by the entity.

(d) The applicant shall file the refund claim along with the copies of bank realization certificate in respect of the services exported.

(e) The refund claim shall be accompanied by a certificate in Annexure A I, duly signed by the auditor (statutory or any other) certifying the correctness of refund claimed in respect of export of services.

(f) Thereafter, the Assistant/Deputy Commissioner may call for any document in case he has reason to believe that information provided in the refund claim is incorrect or insufficient and thereafter after satisfying himself in respect of the correctness of the claim shall allow the claim of exporter of goods or services in full or part as the case may be.

Reference: Section 3 of the central excise Act,1944

Refund of CENVAT credit. –

Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,

(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or
(ii) service tax on output service,

And where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:

Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.
Provided further that no credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act shall be utilised for payment of service tax on any output service.

Explanation: For the purposes of this rule, the words ‘output service which is exported’ means the output service exported in accordance with the Export of Services Rules, 2005.

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