New Delhi, dated the 1
st
March, 2000
11 Phalguna, 1921(Saka)
Notification
No. 11/2000-Central Excise (N.T), dated 1-3-2000.
G.S.R. (E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944), the Central
Government hereby makes the following rules further to amend the Central Excise Rules, 1944, namely:-
1. (1) These rules may be called the Central Excise (Second Amendment) Rules, 2000.
(2) Save as otherwise provided they shall come into force on the 1
st
day of March, 2000.
2. In rule 2 of the said rules, in clause (7) , for the word and figure "section 3", the words, figures and letter "section 3
or section 3A" shall be substituted;
3. In rule 57H of the said rules, after sub-rule (7), the following shall be inserted, namely:-
'(7A) an independent texturiser who has availed of the credit of duty paid on inputs, shall be required to pay an
amount equivalent to the credit, if any, allowed to him in respect of inputs lying in stock, or used in any finished
excisable goods lying in stock as on the 1
st
of March, 2000, and after deducting the said amount from the balance,
if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for
payment of duty on any excisable goods, whether cleared for home consumption or for export.
Explanation. - For the purposes of this sub-rule, "independent testuriser" shall mean a manufacturer engaged in the
manufacture of texturised yarn of polyesters falling under sub-heading No. 5402.32, and who does not have the
facility in his factory (including plant and machinery) for manufacture of partially oriented yarn of polyesters falling
under sub-heading No. 5402.42
4. In rule 57Q of the said rules, -
1. in sub-rule (1), for the Table, the following Table shall be substituted, namely:-
Table
S.No.
Description of capital
goods falling within the
First Schedule to the
Central Excise Tariff Act,
1985 and used in the
factory of the
manufacturer.
Description of final products
(1)(2) (3)
1
1. All goods falling
under Chapter 82,
Chapter 84, Chapter
85 and Chapter 90;
2. Components,
spares and
accessories of the
goods specified at
S.No. 1 above;
3. Moulds and dies;
4. Refractories and
refractory materials;
5. Tubes and pipes
and fittings thereof,
used in the factory;
6. Pollution control
equipment;
7. Grinding wheels and
the like goods falling
under sub-heading
No. 6801.10;
8. Goods falling under
heading No. 68.02;
and
9. Lubricating oils,
greases, cutting oils
and coolants.
All good specified in the First Schedule to the Central Excise Tariff Act, 1985, other than the
following, namely:-
1. all goods falling under heading Nos. 36.05;
2. ingots and billets of non-alloy steel falling under sub-heading No.s 7206.90 and
72.07.90, manufactured in an induction furnace unit, whether or not any other goods are
produced in such Induction furnace, and hot rerolled products of non-alloy steel falling
under sub-heading Nos. 72.11.11, 7211.19, 7211.30, 7211.52, 7211.59, 7211.60,
7211.92, 7211.99, 7213.90, 7214.90, 7215.90, 7213.90, 7216.10 and 7216.90 on
which duty is paid under section 3A of the Central Excise Act, 1944.
1. in sub-rule (3), the word, figures and sign "of 75%" shall be omitted.
1. For rules 57A to 57U of the said rules, the following rules shall be substituted with effect from the 1
st
day of April, 2000,
namely:-
"AA. CREDIT OF DUTY PAID ON EXCISABLE GOODS USED AS INPUTS OR CAPITAL GOODS
57A. Definitions.- For the purpose of this section,-
1. "capital goods" means-
1. All goods falling under Chapter 82, 84, or 90 of the First Schedule to the Central Excise Tariff Act, 1985 and
used in the factory of manufacturer of the final products weather directly for the manufacture of the final
products or for research and develop0ment, quality control, testing, weighment or similar allied functions
related to the production of final products, except office equipment; and
2. Spare part, components and accessories of the goods mentioned at (I) above, whether falling under the
same Chapter or any other Chapter of the First Schedule to the Central Excise Tariff Act, 1985;
1. "exempted goods" includes goods which are chargeable to "Nil rate of duty"
2. "final product" means finished excisable goods manufactured or produced by an assessee;
3. "input" means all goods used in or in relation to the manufacture of final products whether directly or indirectly
and whether contained in the final product or not, and whether used as packing material, or as fuel, or for
generation of electricity or steam, except high speed diesel oil and motor spirit, commonly known as petrol.
Explanation.- The high speed diesel oil or motor spirit commonly known as petrol will not be deemed to be input for any
purpose whatsoever.
57B. CENVAT credit . - A manufacturer or producer of finished excisable goods shall be allowed to take credit of duty of
excise (hereinafter referred to as the CENVAT credit) of,-
1. the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985, leviable under the
Central Excise Act, 1944;
2. the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985, leviable under the
Central Excise Act, 1944;
3. the additional duty under section 3 of the Customs Tariff Act, 1975, equivalent to the duty of excise specified
under clauses (a) and (b) above,
paid on any inputs or capital goods received and used in the factory. The CENVAT credit may be utilized for payment of
duty of excise levied under the First Schedule on any final products manufactured by the manufacturer.
Explanation .- Where the provisions of any other rule or notification provide for grant of partial or full exemption on
condition of non-availability of credity of duty paid on any input or capital goods, the provisions of such other rule or
notification shall prevail over the provisions of the rules made under this section.l
57C. Conditions for allowing CENVAT credit.- (1) The CENVAT credit in respect of inputs and capital goods may be
taken immediately on receipt of the inputs in the inputs in the factory of the manufacturer.
(2) The CENVAT credit in respect of capital goods received in a factory at any point of time in a given financial year shall,
however, be taken only for an amount not exceeding fifty per cent. Of the specififed duty paid on such capital goods in the
same financial year. The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in
which the capital goods were received in the factory of the manufacturer.
Illustration. - A manufacture received machinery on April 16, 2000 in his factory. CENVAT of two lakh rupees is paid on
this machinery. The manufacturer can take credit upto a maximum of one lakh rupees in the financial year 2000-2001,
and the balance in subsequent years.
(3) The CENVAT credit of specified duty paid on the capital goods shall not be allowed in respect of that part of the value
of capital goods which represents the amount of specified duty on such capital goods, which the manufacturer claims as
depreciation under section 32 of the Income-tax Act.
(4) The CENVAT credit shall be allowed even if any input or capital goods are sent ot a job worker for further processing,
testing, repair or any other purpose and it is established from the records, challans or memos or any other document
produced by the assessee availing the CENVAT credit that the goods are received back in the factory.
57D. Obligation of manufacturer of dutiable and exempted goods.- (1) Where a manufacturer avails of CENVAT
credit of specified duty on any inputs, except inputs intended to be used as fuel, and manufactures such final production
which are chargeable to duty and exempted goods, then the manufacturer shall maintain separate accounts for receipt,
consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs
meant for use in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is
intended for use in the manufacture of dutiable goods. The manufacturer, opting not to maintain separate accounts shall
follow either of the following conditions, as applicable to him, namely:-
1. if the exempted goods are,-
1. final products falling under Chapters 50 to 63 of the Schedule to the Central Excise Tariff Act, 1985;
2. tyres of a kind used on animal drawn vehicles or handcarts and their tubes, falling within Chapter 40;
3. black and white television sets, falling within Chapter 85;
4. newsprint, in rolls or sheets, falling within Chapter heading No.48.01, the manufacturer shall debit an amount
equivalent to the CENVAT credit attributable to inputs contained in such final products at the time of their
clearance from the factory, or
1. if the exempted goods are other than those described in clause (a) above,
the manufacturer shall debit an amount equal to eight per cent. Of the total price, excluding sales tax and other taxes, if
any, paid on such goods, of the exempted final product charged by the manufacturer for the sale of such goods at the
time of their clearance from the factory.
(2) The provisions of sub- rule (1) shall not be applicable in case the exempted goods are either,-
1. cleared to a unit in a free trade zone; or
2. cleared to a hundred per cent. Export-oriented undertaking; or
3. cleared to a unit in an Electronic Hardware Technology Park or Software Technology Parks; or
4. supplied to the United Nations or an international organization for their official use or supplied to projects
funded by them, on which exemption of duty is available under notification of the Government of India in the
Ministry of Finance (Department of Revenue) No.108/95-Central Excises, dated 28
th
August, 1995; or
5. cleared for export under bond in terms of the provision of rule 13.
57E. Documents and accounts.- (1) The CENVAT credit shall be taken by the manufacturer on the basis of invoice, bill
of entry or any other document indicating the payment of duty.
(2) The manufacturer shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has
taken the CENVAT credit are goods on which the appropriate duty of excise as indicated in the documents
accompanying the goods, has been paid.
(3) The manufacturer of final products shall maintain proper records for the receipt, disposal, consumption and inventory
of the inputs and capital goods in which the relevant information regarding the value, duty paid, the person from whom the
inputs or capital goods have been purchased is recorded. The burden of proof regarding the admissibility of the
CENVAT credit shall lie upon the manufacturer taking such credit.
57F. CENVAT credit admissible even if inputs or capital goods are purchased from a first or second stage
dealer.- (1) The CENVAT credit shall be admissible even if the inputs or capital goods in respect of which credit is being
taken have been purchased from a first stage dealer or a second stage dealer of the manufacture of such inputs or
capital goods
Explanation,- For the purposes of this rule,-
1. "first stage dealer" means a dealer who purchases the goods directly from -
1. the manufacturer under the cover of an invoice issued under rule 52A or rule 100E or from the depot of the
said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other
premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice.
2. An importer or from the depot of an importer or from the premises of the consignment agent of the importer,
under cover of an invoice.,
1. "Second stage dealer" means a dealer who purchases the goods from a first stage dealer.
1. The CENVAT credit in respect of inputs or capital goods purchased from a first dealer or second stage dealer shall
be allowed only in the first stage dealer or second stage dealer, as the case may be, has maintained records
indicating the fact that the inputs or capital goods were supplied from the stock on which duty was pid by the
producer of such inputs or capital goods and only an amount of such duty on pro rata basis has been indicated in
the invoice issued by him.
57G. Transfer of credit.- (1) If a manufacturer of the Final products shifts his factory to another site or the factory is
transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the
factory to a joint venture with the specific provision for transfer of liabilities of the such factory, then, the manufacturer shall
be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or
amalgamated factory.
(2) The transfer of the CENVAT credit under sub-rule (1) shall be allowed to the extent of credit contained in stock of
inputs as such or in process, or the capital goods are also transferred along with the factory.
57H. Transitional provision.- Any amount of credit earned by a manufacturer under rule 57A, as it existed prior to 1
st
day of April, 2000 and remaining unutilized on that day shall be allowable as CENVAT credit to such manufacturer.
57-I. Recovery of credit wrongly taken.- (1) where the CENVAT credit has been taken or utilized wrongly, the same
along with interest shall be recovered from the manufacturer and the provisions of sections 11A, 11AA and 11AB of the
Act shall apply mutatis mutandis for affecting such recoveries.
(2) Where the CENVAT credit has been taken or utilized wrongly on account of fraud, willful misstatement, collusion or
suppression of facts, or contravention of any of the provisions of the Act or the rules made there under with intention to
evade payment of duty, then, the manufacturer shall also be liable to pay penalty under the provisions of section 11AC of
the ACT are to apply mutates mutandis."
1. For rule 96ZQ of the said rules, the following rule shall be substituted, namely:-
"96ZQ. Procedure to be followed by an independent processor of textile fabrics.- (1) An independent processor
of textile fabrics falling under heading Nos. 52.07, 52.08, 52.09, 54.06, 54.07, 55.11, 55.12, 55.13, or 55.14, or
processed textile fabrics of cotton or man-made fibres, falling under heading Nos. or sub-heading Nos. 58.01, 58.2,
5806.10, 5806.40, 6001.12, 6001.22, 6001.92, 6002.20, 6002.30, 6002.43 or 6002.93, of the First Schedule to Central
Excise Tariff Act, 1985 (5 of 1986), shall debit an amount of duty of Rs. 2.0 lakhs per chamber per month, Rs. 2.5 lakhs
per chamber per month, Rs. 3.0 lakhs per chamber per month or Rs. 3.5 lakhs per chamber per month, as the case may
be, on the annual capacity of production as determined under the Hot air Stenter Independent Textile Processors Annual
Capacity Determination Rules, 2000.
(2) The amount of duty payable under sub-rule. (1) shall be debited by the independent processor in the account current
maintained by him sub-rule (1) of rule 173G of the Central Excise Rules, 1944.
(3) Fifty per cent. of the amount of duty payable for a calendar month under sub-rule (1) shall be paid by the 15
th
of the month
and the remaining amount shall be paid by the end of that month.
(4) The independent processor shall continue to maintain records, and file returns, pertaining to production, clearance,
manufacturing, storage, delivery or disposal of goods, including the materials received for or consumed in, the manufacture of
excisable goods or other goods, the goods and materials in stock with him and the duty paid by him, as prescribed under the
Central Excise Rules, 1944 and the notifications issued thereunder.
(5) If an independent processor fails to pay the amount of duty or any part thereof by the date specified in sub-rule (3), he shall
be liable to,-
(i) pay the outstanding amount of duty along with interest at the rate of twenty-four per cent. per annum calculated for the
outstanding period on the outstanding amount; and
(ii) a penalty equal to an amount of duty outstanding from him at the end of such month or rupees five thousand, whichever is
greater.
(6) If an independent processor removes the processed textile fabrics referred to in sub-rule (1) without complying with any of
the requirements contained in sub-rule (4), then, all such goods shall be liable to confiscation and the independent processor
shall be liable to penalty not exceeding rupees ten thousand.
(7) Where an independent processor does not produce or manufacture the processed textile fabrics specified in sub-rule (1)
during any continuous period of not less than seven days and wishes to claim abatement under sub-section (3) of section 3A of
the Act, the abatement shall be allowed by an order passed by the Commissioner of Central Excise of such amount as may be
specified in such order, subject to fulfillment of the following conditions, namely :-
1. abatement shall be applicable only on complete closure of the factory and not on closure of a hot-air stenter;
2. the independent processor shall inform, in writing, about the closure to the Deputy Commissioner of Central Excise or the
Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise, at
least three days prior to the date of closure;
3. the stenter or stenters shall be sealed in such manner as may be prescribed by the Commissioner of Central Excise;
4. the independent processor, when he starts production again, shall inform in writing about the date of starting of
production to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case
may be, with a copy to the Superintendent of Central Excise, at least three days prior to the date of starting production,
and get the seal opened in such manner as may be specified by the Commissioner of Central Excise before
recommencing the production;
5. the independent processor shall, while sending information under condition (d), declare that his factory remained closed
for a continuous period starting from the hour and date to the hour and date, such hours and dates to be specified in the
declaration;
6. when the claim for abatement by the independent processor is for a period of less than one month, he shall be required to
pay the duty, as applicable, for the entire period of the month and may subsequently seek such claim after payment of
such duty;
7. where the claim for abatement by the independent processor is for a period of one month or more, he shall not be
required to pay the duty for that period in advance;
8. If the claim for abatement by the independent processor has been disallowed by the Commissioner of Central Excise, by
a written order made in this regard, the independent processor shall pay the duty, and interest if any applicable, prior to
getting the stenter or stenters sealed under condition reopened for resuming production;
Provided that the Commissioner of Central Excise, where he is satisfied that the delay in giving information under condition (b)
was caused due to unavoidable circumstances, may, for reasons to be recorded in writing, condone such delay.
Explanation -For the purpose of these rules, an "independent processor" means a manufacturer who is engaged primarily in
the processing of fabrics with the aid of power and who also has the facility in his factory (including plant and equipment) for
carrying out heat-setting or drying, with the aid of power or stream in a hot-air stenter and who has no proprietory interest in any
factory primarily and substantially engaged in the spinning of yarn or weaving or knitting of fabrics, on or after the 10
th
December, 1998."
1. In rule 173 G of the said rules,-
1. for sub-rule (1), the following shall be substituted with effect from the 1
st
day of April, 2000, namely:-
"(1)(a)Every manufacturer shall discharge his duty liability in respect of clearances made during the first fortnight of the month,
by the sixteenth day of that month, and in respect of clearances made during the second fortnight of the month, by the last
working day of that month:
Provided that a manufacturer availing of the exemption under a notification based on value of clearances in a financial year
may discharge his duty liability in respect of clearances made during a calendar month, by the fifteenth day of the succeeding
month.
1. the manufacturer shall maintain an account current with the Commissioner and shall discharge his duty liability by debiting
such account-current, in the following manner:
1. the manufacturer shall assess the duty due on the excisable goods intended to be removed, for each consignment and
shall enter the particulars of such consignments in Form RG-I with the amendment in the said Form RG-I that for the
words "On payment of duty", the words "Amount of duty payable" had been substituted;
1. the manufacturer shall indicate on each invoice, issued under rule 52A, the amount of duty payable.
1. The duty of excise shall be deemed to have been paid on excisable goods, and the credit of such duty, as may be
prescribed, under any rule, will be permissible.
2. If the manufacturer fails to pay the amount of duty payable by the due date, he shall be liable to pay the outstanding
amount along with interest at the rate of twenty four per cent. Per annum on the outstanding amount, for the period starting
with the first day after due date till the date of actual payment of the outstanding amount.
3. If the manufacturer defaults on account of any of the following reasons, namely:-
1. full payment of any one installment is discharged beyond a period of thirty days from the date on which the
installment was due in a financial year, or
2. the due date on which full payment of installments are to be made is violated for the third time in a financial whether
in succession or otherwise,
then the manufacturer shall forfeit the facility to pay the dues in installments under this sub-rule for a period of two
months, starting from the date of communication of an order passed by the proper officer in this regard and during
this period the manufacturer shall be required to pay excise duty for each consignment by debit to the account
current referred to in clause (b) and in the event of any such failure it will be deemed as if such goods have been
cleared without payment of duty and the consequences and penalties as provided in the Central Excise Rules shall
follow."
3. for sub-rule (5), the following sub- rule shall be substituted, namely:
"(5)(a) Every assesee shall furnish to the proper officer, list in duplicate, of all the records prepared or maintained by him for
accounting of transactions in regard to receipt, purchase, manufacture, storage, sales or delivey of the goods including inputs
and capital goods.
Explanation.-For the purposes of this rule,-
1. the expression 'records' shall include account, agreement, invoice, price-list, return, statement or any other source
document, whether in writing or in any other form;
2. the expression 'source documents' means all documents which form the basis of accounting of transactions and
include slaes invoice, purchase invoice, journal voucher, delivery challan and debit or credit note.
1. Where an assessee maintains or generates such records by using computer, such assessee shall submit the
following information to the proper officer, namely:-
1. documentation including policy and procedure manuals, instructions to record the flow and treatment of transactions
through accounting system, from the stage of initiation to closure and storage;
2. account of the audit trail and inter-linkages including the source document, whether paper or electronic, and the
financial accounts; and
3. record layout, data dictionary and explanation for codes used and total number of records in each fields along with
sample copies of documents.
Whenever changes are made in the systems adopted by the assessee, he shall inform the proper officer and submit the
relevant document.
1. The assessee shall be responsible for keeping, maintaining, retaining, and safeguarding records.":
1. for sub-rule (6), the following sub-rule shall be substituted, namely:-
"(6) (a) Every assesee shall, on demand make available to the Central Excise Officer or the audit party deputed by the
commissioner or the Comptroller and Auditor General of India:-
1. the records maintained or prepared by him in terms of clause (a) of sub-rule (5):
2. The cost audit reports, if any, under section 233B of the Companies Act, 1956: and
3. The Income-tax audit report, if any, under section 44B of Income-tax Act, 1961,
for the scrutiny of the officer or audit party, as the case may be.
1. Every assessee who is having more than one factory and maintains separate records in respect of every factory for
the purpose of aduit then, he shall produce the said records for audit purposes.
2. Where the Commissioner or the Comptroller and audit General of India decide to undertake the audit of the records
of any assessee, said assessee shall be given notice thereof at least fifteen days before the commencement of
such audit. The audit party deputed for the purpose shall also call for in writing the records, which are required to be
produced by the assessee, either before or during the course of audit.
3. Every assessee, who maintains or generates his records by using computer, shall provide the required records in
the form of tapes or floppies or cartridges or compact disk or any other media in an electronically readable format
as precribed by the commissioner at the time of audit. The copies of records, so furnished, shall be duly
authenticated by the assessee.
4. All records submitted the audit party in electronic format shall be used only for verification of payment of duties or
excise or for verification, of compliance of the provisions of Central Excise Act, 1944 or the rules made there under
and shall not be used for any other purpose without the written consent of the assesse.":
1. for sub-rule (9), the following sub-rule shall be substituted, namely:-
"(9)Every assessee shall preserve the records including books of accounts and source documents and data in any electronic
media, where any document is generated on computer, for five financial years immediately after financial year to which the
records pertain."
1. In rule 173GG of the said rules, in sub-rule (3) for the words "thirty per cent." The words "twenty four per cent." Shall be
substituted.
2. Rule 173 GG of the said rules shall be omitted on and from 1
st
April, 2000.
(T.R.Rustagi)
Joint Secretary to the Government of India
(F.No. 334/1/2000-TRU)
