Cenvat credit claiming

This query is : Resolved

SIDDAROODHA HIREMATH (Querist)
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09 January 2012 RESPECTED SIR...
OUR COMPANY IS A MFG OF BOTH EXCISABLE & NON EXCISABLE PRODUCT..& WE ARE PAYING THE INTERNAL AUDIT FEES,MANAGEMENT CONSULTANT FEES,LABOUR SUPPLYING CONTRACTOR (LABOUR ARE USED FOR BOTH EXCISABLE WORK & NON EXCISABLE WORK & THERE IS NO SPECIFIC IDENTIFICATION REGARDING TO UTILISATION OF LABOUR IN VARIOUS SERVICES) ETC SO MY QUERY IS THAT ....
WHETHER WE CAN CLAIM CENVAT CREDIT ON SERVICE TAX PAID TO INTERNAL AUDITORS,TAX CONSULTANTS,& LABOUR SUPPLYING CONTRACTOR
(IN SEC 6 OF EXCISE ACT THERE IS ONLY 16 SPECIFIED SERVICES ON WHICH WE CAN CLAIM CENVAT)

WHETHER INTERNAL AUDITORS,TAX CONSULTANTS COMES UNDER THE CATEGORY OF MANAGEMENT CONSULTANTS....

THANKING YOU...

S B HIREMATH
AUDIT ASSISTANT
MATHAPATI & CO
CHARTERED ACCOUNTANTS
BELGAUM

Maninder Jain

Maninder Jain (Expert)
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10 January 2012 A manufacturing company which manufacture both dutiable & exempt goods have three options:

(1) Segragate all the cenvat invoice for manufacturing dutiable & exempt goods & take cenvat only on those goods & services which are being used for manufacturing dutiable goods.
(2) If (1) is not possible, pay 5% duty on Exempt goods & take cenvat on all inputs services & goods.
(3) If (1) & (2) is not possible or not beneficial to you, you can segregate the cenvat invoice between three catagory.

First catagory is Exclusive catagory where input is used only for manufacturing dutiable goods. Here you can take full credit.

Second catagory is common catagory, where the services are commonly used for manufacturing dutiable & exempt goods. In this case you make details of total credit & at month end waive the credit in the ratio of (Exempt sale devided by Total sale). For example you have 1 lac credit in common catagory in the month of Jan 11. Your total sale (dutiable plus exempt) is Rs.. 10 lac & exepmt sale is 2 lac. Then you waive 20% credit of Rs. 1 lac & take credit of Rs. 80000 only (1 lac * 2 lac / 10lac.

Third catagory is services which are being used only for manufacturing exempt goods. Here you do not take credit at all.
If you go for option no. (3), then make robust record keeping so that you can show to your excise auditors.