Assocham for new Cenvat Credit Rules 2006

New Delhi, Oct 1: Industry chamber Assocham has sought urgent replacement of existing Cenvat Credit Rules 2004, with new set of rules 2006, which can take care of practical aspects of business across the country.

In a representation submitted to the Finance Minister P Chidambaram, the Associated Chambers of Commerce and Industry (Assocham) has identified a couple of instances on which the assesses and the government are confused for availability of Cenvat Credit, said Assocham President Anil K Agarwal here today.

These issues include service tax paid by a manufacturer on the transportation of final product from the place of removal and availability of Cenvat Credit of service tax paid on mobile phones.

The other two issues listed by the Chamber also include service tax paid on various input services which are commonly utilised for the taxable and non-taxable services as also service tax pay on various input services by a person/company which is engaged in trading as well as manufacturing activities.

Mr Agarwal added that other than the aforesaid issues, Cenvat availability on number of other items is subject to confusion as the chamber had received a number of representations from its constituents which it would like to take up with the policy makers on the issue in due course of time.

The chamber has also pointed out that fiscal reforms have always been on the economic agenda and it appreciates initiative to integrate the Central Excise and Service Tax in the year 2004.

In this direction, Cenvat Credit Rules 2004 were framed by integrating the credit of Central Excise and Service Tax.

On number of issues, there are diversion of views even from the different Commissionerates and Department of Revenues. At the same time, there can be certain companies which might be taking the benefit of such ambiguities and taking the credit which may not be intended to be given to them.

It has further pointed out that such confusion arises mostly in respect of availment of Cenvat Credit on input services. As is known, services are totally different from goods and it is not possible to apply the same law and logic, which is available to Cenvat Credit on inputs (Excise).

Further, under the present law, no distinction has been made for the availment and utilisation of Cenvat Credit in respect of duty of Excise and Service Tax, feels the chamber.

In other words, some set of rules is applicable for the availment and utilisation of Cenvat Credit by service provider and manufacturer.

Further, the present law has also not recgonised the fact that the same person may be a provider of taxable and non-taxable servies as well as manufacturer of dutiable and non-dutiable goods.

The chamber has therefore urged Mr Chidambaram to immediately intervene and issue directives to authorities concerned so that new Cenvat Credit Rules 2006 are put in place through issuance of notification and industry hives a sigh of relief.

UNI