CENVAT Credit Rules, 2004

Notification No. 23/2004-C.E. (N.T.), dated 10-9-2004

10th September 2004

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) and in supersession of the CENVAT Credit Rules, 2002 and the Service Tax Credit Rules, 2002, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules.

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1 Short title, extent and commencement

(1) These rules may be called the CENVAT Credit Rules, 2004.

(2) They extend to the whole of India :

Provided that nothing contained in these rules relating to availment and utilization of credit of service tax shall apply to the State of Jammu and Kashmir.

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

2 Definitions

In these rules, unless the context otherwise requires, -

• "capital goods" means :-
  • the following goods, namely :-
    • all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, [heading 6805, grinding wheels and the like, and parts thereof falling under [heading 6804 and wagons of sub-heading 860692]] of the First Schedule to the Excise Tariff Act;
    • pollution control equipment;
    • components, spares and accessories of the goods specified at (i) and (ii);
    • moulds and dies, jigs and fixtures;
    • refractories and refractory materials;
    • tubes and pipes and fittings thereof; [* * *]
    • storage tank, [and]
    • motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis [but including dumpers and tippers],]
  • used -
    • (1) in the factory of the manufacturer of the final products, [* * * ]; or
    • [(1A) outside the factory of the manufact
      

3 CENVAT credit

(1) A manufacturer or producer of final products or a [provider of output service] shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of -

• (i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act :
  • [Provided that CENVAT credit of such duty of excise shall not be allowed to be taken when paid on any goods -
    • (a) in respect of which the benefit of an exemption under Notification No. 1/2011-C.E., dated the 1st March, 2011 is availed; or
    • (b) specified in serial numbers 67 and 128 in respect of which the benefit of an exemption under Notification No. 12/2012-C.E., dated the 17th March, 2012 is availed;]
• (ii) the duty of excise specified in the Second Schedule to the Excise Tariff Act, leviable under the Excise Act;
• (iii) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile A
  

4 Conditions for allowing CENVAT credit

(1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service [or in the premises of the job worker, in case goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service, as the case may be]:

[Provided that in respect of final products, namely, articles of [jewellery or other articles of precious metals falling under Heading 7113 or 7114, as the case may be] of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker :]

[Provided further that the CENVAT credit in respect of inputs may be taken by the p

5 Refund of CENVAT Credit

[(1) A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette :

$$\text{Refund amount} = \frac{(\text{Export turnover of goods} + \text{Export turnover of services})}{(\text{Net CENVAT credit})}$$Total turnover

Where, -

• (A) “Refund amount” means the maximum refund that is admissible;
• (B) “Net CENVAT credit” means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of rule 3, during the relevant period;
• (C) “Export turnover of goods”
  

5A Refund of CENVAT credit to units in specified areas

[Notwithstanding anything contrary contained in these rules, where a manufacturer has cleared final products in terms of notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 20/2007-Central Excise, dated the 25th April, 2007 and is unable to utilize the CENVAT credit of duty taken on inputs required for manufacture of final products specified in the said notification, other than final products which are exempt or subject to nil rate of duty, for payment of duties of excise on said final products, then the Central Government may allow the refund of such credit subject to such procedure, conditions and limitations, as may be specified by notification.

Explanation : For the purposes of this rule, “duty” means the duties specified in sub-rule (1) of rule 3 of these rules.]

5B Refund of CENVAT credit to service providers providing services taxed on reverse charge basis

[A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette.]

6 Obligation of a manufacturer or producer of final products and a [provider of output service]

[(1) The CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input service as is used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services and the credit not allowed shall be calculated and paid by the manufacturer or the provider of output service,in terms of the provisions of sub-rule (2) or sub-rule (3), as the case may be :

Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.

Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a con