In a major relief to small companies, the government on Thursday relaxed Cenvat Credit Rules to exempt manufacturers paying excise duty of less than Rs 1 crore (Rs 10 million) from filing a declaration on the main inputs going into the finished goods.
More than 97,000 small companies will benefit from the relaxation of rules and will be able to take Cenvat credit easily.
Less than 3,000 large industrial units manufacturing specified goods would need to file a declaration annually, furnishing information regarding the principal inputs of the finished goods by April 30 every year.
"Such declaration is not required to be filed by all manufacturers but only by those manufacturing certain specified commodities, who have paid excise duty of Rs 1 crore and above in preceding financial year," the finance ministry said in a release.
Big manufacturers would also be required to submit a monthly return giving information about the receipt and consumption of declared principal inputs and the corresponding quantity of final products manufactured by them.
In the past, major legal and procedural relaxations have been given for enabling companies to avail Cenvat credit, which is allowed on invoices issued by the manufacturers as well as first and second stage dealers.
Earlier, such invoices issued by manufacturers were admissible. But as part of efforts to help trade, the facility of issuing invoices was extended to the first stage and second stage dealers.
The declarations made by the recipient factories for taking advantage of input duty credit based on invoices is generally accepted and no routine checks are undertaken.
"No permission or intimation is required to avail the Cenvat credit scheme. There is also a provision for condonation of procedural violations," the release said.
Considering the quantum of 'availment' of Cenvat credit, it is felt necessary that some of the data of principal inputs and their consumption vis-a-vis the finished goods is obtained.
Such information will facilitate selection of units for audit and save the assesses from routine queries and checks.
