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Seeks to amend CENVAT credit Rules, 2004

Circular No.ES/37 /2017-18                                                              April 17, 2017

To: Members of the Council

Sub Seeks to amend CENVAT credit Rules, 2004 to allow the importer of the goods to take Cenvat credit on basis of the challan of payment of service tax by the said importer on the services provided by a foreign shipping line to a foreign charterer w.r.t. goods destined for India.

Dear Member,

CBEC has issued Notification No. 10/2017-Central Excise (N.T.), dated 13.04.2017  by making amendments in the CENVAT Credit Rules, 2004 on the above subject. These rules may be called the CENVAT Credit (Second Amendment) Rules, 2017, and shall come into force on the 23 rd day of April, 2017.

In the CENVAT Credit Rules, 2004,–

(1)    in rule 2, in clause (l), for the words starting with ‘“input service” means’ and ending with “clearance of final products upto the place of removal,” following shall be substituted, namely,-      

            ‘“input service” means,-

(i)   services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services and the said imported goods are his inputs or capital goods; or

(ii)   any service used by a provider of output service for providing an output service; or

(iii)   any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,’;

(2)    in rule 4, in sub-rule (7), after the second proviso, following shall be inserted namely,-

“Provided also that in respect of services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the said taxable services, credit of service tax paid by the person liable for paying service tax shall be allowed after such service tax is paid:”;

(3)    in rule 9, in sub-rule (1), after clause (e), following shall be inserted, namely,-

“(ea) a challan evidencing payment of service tax by the manufacturer or the provider of output service being importer of goods as the person liable for paying service tax for the services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India; or”.

Members may kindly make note of the same.

Thanking you,

V.ANIL KUMAR
EXECUTIVE DIRECTOR

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