Self Credit Scheme under Excise

Self Credit Scheme under Excise
(BY MOHAN,EDITOR,JAB WE MET CA)
Self Credit Scheme is one of the privilege given to an establishment in the state of Jammu and Kashmir by giving benefits of Central Excise
Original notification 57/2002…….. Exempts the goods specified in the schedule cleared from a unit located in the state of Jammu & Kashmir, from so much of amount of excise livable thereon under excise act as equivalent to amount of duty paid by the manufacturer of goods other than the amount of duty paid by utilization of CENVAT credit under CER 2002.

The point to be noted here is its only the amount of Excise which is exempted , the Assesee is required to pay the amount of CESS out of PLA, in other words we can say it can not be used for the payment of CESS.

Manufacturer has two Options
Either take refund of Duty paid on Cash or Take Credit of That Amount

Eg…..

Excise Payable on Output Rs100
Less:-
CENVAT Availed Rs 40

Excise Paid In Cash Rs 60


Now either he can take refund of this amount or…….

Next Month Excise Payable RS 200
Less;-
CENVAT Availed Rs 80
Less:-Self Credit Rs 60

(the amount paid in cash of last Month)
Payment to be made in Cash RS 60

Next Month Self Credit Available Will be 120 (I.e 60+60) as the amount paid as self credit will also be treated as paid in cash.
Now……… Notification 57/2002 is amended by Notification 22/2008

The amount of Self Credit taken is reduced by inserting following words

Credit Available……………….is of … Duty payable on VALUE ADDITION undertaken in the manufacture of the said goods by said unit

Duty Payable on Value Addition

Total Duty Payable (Gross) * %age specified in notification

Credit Available is of Duty Payable on Value Addition
Or
Amount paid in Cash
Which ever is less

Article by:-
Mohan Chand