CBEC has issued directions regarding non-transition of certain CENVAT Credit and Blocked Credit
Central Board of Excise and Customs has issued Circular No 33/07/2018- GST dated 23rd February, 2018 and has directed the following to the taxpayers –
A) Non-utilization of Disputed Credit carried forward
Certain CENVAT credit pertaining to which a show cause notice was issued under CENVAT Credit Rules, 2004, which has been adjudicated and where in the last adjudication order or the last order-in-appeal, as it existed on 1st July, 2017, it was held that such CENVAT credit is not admissible, then such CENVAT credit (hereinafter referred to as “disputed credit”), credited to the electronic credit ledger, shall not be utilized by a registered taxable person to discharge his tax liability under GST regime, till the order-in-original or the last order-in-appeal, as the case may be, holding that disputed credit as inadmissible is in existence.
If the said disputed credit is utilised, it shall be recovered from the tax payer, with interest and penalty as per the provisions of the Act.
B) Non-transition of Blocked Credit
A registered person shall not take in his electronic credit ledger, amount of CENVAT credit as is carried forward in the return relating to the period ending with the day immediately preceding the appointed day which is not eligible under the Act (hereinafter referred to as “blocked credit‟), such as, telecommunication towers and pipelines laid outside the factory premises.
If the said blocked credit is utilised, it shall be recovered from the tax payer, with interest and penalty as per the provisions of the Act.
In all cases where the disputed credit or blocked credit under is higher than Rs. 10 lakhs, the taxpayers shall submit an undertaking to the Jurisdictional Officer of the Central Government that such credit shall not be utilized or has not been availed as transitional credit, as the case may be.
For more information please refer the attached circular