25 December 2008
1. Our client is engaged in the trading business of glass as well as providing job work facility of glass which are used in Building Construction. This job work facility is chargeable in Service Tax as “Commercial and Industrial Construction Service”.
2. Out of purchase of excisable goods (Glasses) used for trading as well as in the job work.
3. Service tax is collected @ 12% on the Job work services and the credit of the purchase of whole goods is taken as CENVAT credit.
Whether the treatment is proper as per CENVAT credit amended Rules (2008)?
Can we take CENVAT on whole purchased of goods against only part of the goods are used for Job Work i.e. Service Tax purpose?
26 December 2008
When you are providing taxable service as well as trading, your company has to bifurcate the CENVAT Credit in proportion to the taxable service and trading. The CENVAT credit Rules have defined the apportionment of input tax credit if the assessee is providing the taxable service and exempted service. So the Rule of payment of 8% of exempted service is not applicable to avail the full CENVAT Credit. In that case the CENVAT Credit has to be availed only to the extent of glass used in providing the taxable service which can be determined on estimation basis or based on details in Books of Accounts
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