This Tax Alert gives an update on the Notification No. 1/2016 – Central Excise (N.T.) and Circular No. 1014/2/2016-CX, both dated 1 February 2016, issued by the Ministry of Finance and the Central Board of Excise and Customs respectively.
Vide Notification no. 1/2016 – Central Excise (N.T.) dated 1 February 2016, the proviso to Rule 3(1)(vii) of CCR has been deleted with retrospective effect from 1 March 2015, thereby entitling ship breaking units to avail 100% CENVAT credit of Additional duty of Customs / Countervailing Duty (CVD) paid by such units.
Pursuant to Gujarat High Court decision in the case of M/s. Shivam Engineering, references were received from trade and field formations. Accordingly, CBEC has issued Circular No. 1014/2/2016-CX dated 1 February 2016 providing clarification on the Show Cause Notices issued for non-payment of CVD and wrong availment of CENVAT credit on payment of CVD.
The conflict regarding reversal of credit to be done under proviso to Rule 3(1)(vii) or under Rule 6 of CCR has been resolved.
The benefit of 100% CENVAT credit made available retrospectively by the Government will go a long way to help the ship breaking industry which paid CVD on their imports. This coupled with the clarifications issued by CBEC will also provide much awaited relief from ongoing litigation.
Share this:
Twitter
Facebook
Like this:
Like Loading…