Introduction:-<\/u><\/strong><\/h3>\n

Budget, 2016 has come up with some new provisions and concepts in the Central Excise Law. One such provision has been introduced in the name of rule 7B of Central Excise Rules, 2004 which has been framed on the same lines of input service distributor. This little article is about this new concept in the Central Excise Law.<\/p>\n

New Rule 7B in Cenvat Credit Rules, 2004:-<\/u><\/strong><\/h3>\n

After rule 7A of the CCR, the following rule 7 shall be inserted w.e.f. 1.4.2016:-<\/p>\n

7B. Distribution of credit on inputs by warehouse of manufacturer. – <\/em><\/p>\n

(1) A manufacturer having one or more factories, shall be allowed to take credit on inputs received under the cover of an invoice issued by a warehouse of the said manufacturer, who receives inputs under cover of invoices, issued in terms of the provisions of the Central Excise Rules, 2002, towards the purchase of such inputs. <\/em><\/p>\n

(2) The provisions of these rules or any other rules made under the Excise Act as applicable to a first stage dealer or a second stage dealer, shall, mutatis mutandis, apply to such warehouse of the manufacturer. <\/em><\/p>\n

Analysis of new rule 7B:-<\/u><\/strong><\/h3>\n

This provision has following key features:-<\/p>\n

\n
• It is applicable on manufacturer having one or more factories.<\/li>\n
• It is related to distribution of credit on inputs under a cover of excise invoice which are received by the warehouse.<\/li>\n
• The credit will be allowed on the basis of invoice issued by warehouse of said manufacturer.<\/li>\n
• The warehouse shall be required to follow the provisions as applicable to a first stage dealer or a second stage dealer.<\/li>\n<\/ul>\n

  While winding:-<\/u><\/strong><\/h3>\n

  At present, there is concept of input service distributor which distributes the credit on invoices of input services received by it. On the same lines, the concept of distribution of credit on inputs by warehouse has been introduced by this budget. This provision shall prove helpful to those manufacturers who have more than one unit. In such cases, normally manufacturer intent to purchase inputs in bulk, however, at times it is not possible to exactly ascertain which unit will require how much quantity. Thus, there are cases where invoice is issued to the address of one unit while the inputs are actually utilized in some other unit of same manufacturer. A lot of litigation has already been faced by such manufacturers regarding availment of credit as the invoice bear address of some other unit while the inputs are consumed at some other place. A no. of tribunal decisions like LARSEN & TOUBRE LIMITED Versus COLLECTOR OF C. EXCISE, BHUBANESWAR [1994 (72) E.L.T. 948 (Tribunal)] <\/em><\/strong>and A.S.W.M. SPINNING MILLS Versus COMMISSIONER OF C. EX., CHANDIGARH [2002 (148) E.L.T. 325 (Tri. – Del.)] <\/em><\/strong>are there where credit has been allowed in the unit where the same have been actually consumed regardless of the fact that the invoices bear address of some other unit. This provision will help to reduce litigation in such cases as the inputs may be purchased by the unit considered as warehouse in bulk and further invoiced to respective units as and when required. Thus, the new provision, the hopeful one, introduced to benefit a class of manufacturers, namely multi-unit companies!!!<\/p>\n","protected":false},"excerpt":{"rendered":"

  Introduction:- Budget, 2016 has come up with some new provisions and concepts in the Central Excise Law. One such provision has been introduced in the name of rule 7B of Central Excise Rules, 2004 which has been framed on the same lines of input service distributor. This little article is about this new concept in … Read more<\/a><\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5],"tags":[397],"class_list":["post-2714","post","type-post","status-publish","format-standard","hentry","category-services-tax","tag-cenvat"],"yoast_head":"\n