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Reverse Excess Credit Taken

Aashish Padol (EXCISE EXECUTIVE) (206 Points)

22 July 2011

Dear Expert,

Your valuable advice require in the following case..

We want to reverse the excess credit wrongly taken for Invoice dt. 12.4.11. will it attract the penalty or interest?

Amount of Excise is Rs.356, ED. Cess is Rs.7 & SHE Cess is Rs.4.

Secondly where to show this effect in ER-1 (Is it ok to show this in Sr. no. 5 under heading "Credit utilize for other payment", also in sr. no. 6(3) under heading "Details of other payments made-Miscellaneous")

Awaiting your reply.

Thanks in advance. Aashish

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5 Replies

Dilip Kumar Agarwal (A) (128 Points)
Replied 22 July 2011

Dear Friend, you can reverse the credit taken and reflect it in cenvat credit register as negative entry with reference of cenvat credit serial number on which the same was availed. You need to pay interest from the date cenvat credit was availed till the date of reversal.

Regards,

CA Dilip Kumar Agarwal

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Aashish Padol (EXCISE EXECUTIVE) (206 Points)
Replied 22 July 2011

Originally posted by : Dilip Kumar Agarwal
	Dear Friend, you can reverse the credit taken and reflect it in cenvat credit register as negative entry with reference of cenvat credit serial number on which the same was availed. You need to pay interest from the date cenvat credit was availed till the date of reversal. Regards, CA Dilip Kumar Agarwal

Dear sir, what is the interest rate.

Thanks in advance. - Aashish

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 23 July 2011

Originally posted by : Aashish Padol
	Dear Expert, Your valuable advice require in the following case.. We want to reverse the excess credit wrongly taken for Invoice dt. 12.4.11. will it attract the penalty or interest? Amount of Excise is 356, ED. Cess is 7 & SHE Cess is Rs.4. Secondly where to show this effect in ER-1 (Is it ok to show this in Sr. no. 5 under heading "Credit utilize for other payment", also in sr. no. 6(3) under heading "Details of other payments made-Miscellaneous") Awaiting your reply. Thanks in advance. Aashish

if the credit so taken is not used under payment for clearance, then its mere clarical error, and the assessee has not used the credit on getting the facts under hand that its taken for error, so mere reversal is enough.

however if the duty has been utilized for payment of duty on clearance, then interest @ 1.5% per month or part thereof applicable.

as you told to reverse, it indicates that the duty is never used, so there is no interest / penalty on self reversal ( do it right now, as if noticed once by department, it would be counted as wilful malpractice and evasion )

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NILESHKUMAR (SR MANAGER INDIRECT TAXATION) (312 Points)
Replied 23 November 2011

Please refer Rule 14 of CCR 2004 i.e recovery of Cenvat credit wronglyu taken or errornoulsy refunded. In your case you have takne the credit wrogly unintentioanlly but as per the rule the same has to be reversed with due interest even if is not uttilised. There are certain case laws which reported in favour of assessee but the same are being chellenged by CBEC. Looking to the tune of the Cenvat Amount , it is suggested to pay with interest to avoid any litigation for such a small dispute.

NILESH KUMAR BANKER

Genereal Manager Indirect Taxation)

Chiripal Group