The Hindu Business Line : CBEC issues order on unused Cenvat

THE Central Board of Excise and Customs (CBEC) does not want assessees to get away with unintended dual benefit under the excise law as well as the Income-Tax law on account of the treatment of unutilised Cenvat credit balance at the year-end.

The board has issued instructions that the field formations be sensitised against the unintended dual benefit availed of by certain assessees under both the laws.

It has been brought to the board's notice that in certain commodities, where there is accumulated Cenvat credit due to inverted duty structure or due to other reasons, the unutilised credit lying in balance at the end of the financial year is claimed as expenditure and debited to the profit and loss account.

At the same time, even after claiming the amount as expenditure for income tax purposes, the said amount is maintained in the Cenvat credit account, which can be subsequently utilised for the payment of duty on any other finished goods manufactured by the same assessee or for any other purpose in accordance with the excise law.

The board has held that availing of double benefit may escape notice since there is no time limit to utilise the remaining Cenvat credit and there is no one-to-one co-relation between the inputs and the finished products.

"In case the Cenvat credit balance has been treated as expenditure in the profit and loss account and has not been written off in the books of accounts, the Income-Tax authorities concerned should be suitably intimated. The audit parties should also keep this aspect in mind while conducting audit," the CBEC said in a recent circular issued on this matter.