What happens to the CENVAT Credit when a dealer who was not registered under Excise Act receives goods cleared before 1st July 2017? Under the GST regime, the manufacturer is required to issue a Credit Transfer Document in such cases. Let us learn about these documents in detail.
A Credit Transfer Document (CTD) is a form issued by a manufacturer of goods, as an evidence of payment of Excise Duty on goods manufactured and cleared before 1st July. The goods must be cleared to a person not registered under Central Excise Act but is a registered trader under GST.
Conditions for Issuing a Credit Transfer Document
The goods are distinctively identifiable (eg – brand, chassis number or engine number of the car) and the value of the goods manufactured is more than Rs. 25,000 per item or per unit.
The manufacturer maintains documents which have itemized details of clearance of goods, and the duty paid on them. These records should be made available for verification on demand by a Central Excise Officer.
The CTD should be serially numbered and also contain the:
Central Excise registration number
address of the Central Excise Division
name, address and GSTIN number of the person to whom it is issued
description, classification, invoice number with date of removal, mode of transport and vehicle registration number
the rate of duty, quantity, value and excise duty paid
The manufacturer should make sure that the trader to whom Credit Transfer Document is issued is in possession of the goods in the same form in which it was cleared by the manufacturer.
The dealer availing credits through CTDs should maintain invoices of buying and selling from the manufacturer.
CTD should not be issued in favour of a dealer to whom an invoice was issued for the same goods before 1st July 2017, as the dealer will carry forward ITC on basis of invoice, and will end up claiming input tax credit twice if CTD is issued.
A dealer availing credit using Credit Transfer Document on manufactured goods shall not be eligible to avail credit under Transition Rules of the CGST Act, 2017, on identical goods manufactured by the same manufacturer available in the stock of the said dealer, for the same reason as above.
At the time of the supply of goods, the dealer availing credit on the basis of Credit Transfer Document should mention the corresponding Credit Transfer Document number in the invoice issued by him.
What is the Process for Issuing a Credit Transfer Document (CTD)?
The manufacturer should issue a CTD within 30 days from 1st July, 2017, i.e before 30th July, 2017. Also, the manufacturer has to attach the relevant invoices with the Credit Transfer Document.
What Happens When a Manufacturer Issues a CTD, and CENVAT Credit is Availed Twice on the Same Goods?
The manufacturer will be jointly and severally liable along with the dealer for excess credit availed by the dealer along with interest and penalty under CENVAT Credit Rules 2004.
What Are the Documents Needed to Be Filed?
Due Date for filing
Who should issue the document
Table 1 of TRANS 3
60 days from 1st July 2017
Manufacturer issuing the CTD
Table 2 of TRANS 3
60 days from 1st July 2017
Dealer availing the credit based on the CTD
No due date
Manufacturer issuing the CTD. Records have to be made available to the appropriate Central Excise Officer on demand
No due date
Dealer availing the credit based on the CTD. Records have to be made available to the appropriate Central Excise Officer on demand
Formats of the FORMS TRANS 3, 3A and 3B
Below you will find the formats of the different forms Trans 3, 3A and 3B that are important both for the manufacturer issuing a CTD, or the dealer availing the credit via CTD:
Note: These rules are draft rules and final rules have not yet been issued by the CBEC.
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