14 December 2013
Eligible Cenvat Credit [Rule 3(1) of Cenvat Credit Rules] ******************************************
¨ Excise duty paid on input goods, service tax paid on input services and excise duty paid on capital goods
¨ CVD (in case of imports which is equal to excise duty)
¨ Special CVD (4%) on imports – credit only to manufacturers
¨ No credit of Education Cess and SAHE cess on imports after 17-3-2012 as that cess is only of customs duty and not of CVD.
¨ Education cess and SAHE cess paid on excise duty and service tax (not on imported goods)
¨ Record of credit of education cess and SAHE cess to be kept separately as the credit cannot be used for basic duty and service tax, but vice versa allowable i.e. Credit of basic excise duty and service tax can be utilised for payment of education cess and SAHE cess.
Credit on receipt of Invoice ****************************
¨ Credit can be taken on receipt of invoice, but in respect of Cenvat credit of service tax, if payment is not made to service provider within 3 months, credit is to be reversed.
¨ Proportionate credit of service tax if proportionate amount paid (No specific provision in Rules, but this view is based on principle of harmonious interpretation of law).
¨ No such restriction in respect of excise duty – Credit is available even if no payment is made to supplier-manufacturer of goods.
Utilisation of Cenvat Credit
¨ All taxes and duties specified in rule 3(1) of Cenvat Credit Rules form a ‘pool’. This credit can be utilised by manufacturer of excisable goods or provider of taxable service, for payment of any tax or duty as specified in rule 3(4) of Cenvat Credit Rules.
¨ One to one relation is not required (However, you cannot ignore rule 6 of Cenvat Credit Rules).
¨ Cenvat credit of basic excise duty and service tax can be utilised for payment of education cess and SAHE cess but vice versa is not permissible.
¨ An assessee who is manufacturer and also service provider can utilise credit of excise duty for payment of service tax and vice versa.
No challenge to tax paid by supplier or service provider
¨ Service tax and duty paid by service provider is eligible as input – Excise Officers at end of the receiver cannot challenge tax or duty paid at end of supplier-manufacturer or service provider.
¨ Entire Cenvat credit of service tax paid by provider of service and excise duty paid by supplier-manufacturer of goods is eligible for Cenvat credit.
¨ Receiver cannot be penalised for default of supplier-manufacturer or service provider.
Rebate of input service tax credit to exporters
¨ Rebate of service tax paid on input services to exporters even if they are not manufacturers – Notification No. 41/2012-ST dated 29-6-2012
¨ Exemption for services to foreign commission agent and Goods Transport Agency Services – subject to procedures as specified in Notification Numbers 42/2012-ST dated 29-6-2012and 31/2012-ST dated 20-6-2012.
¨ Manufacturer – better avail Cenvat Credit if can be used, instead of following the clumsy rebate or exemption procedure
There is no requirement of service tax registration for availment of cenvat credit on input services received by the manufacturer. But your query relating to manufacturer dealer. Therefore, presuming that you are a dealer, then there is no scope for availment of cenvat credit on input services. You will be issuing cenvatable invoices and passing on the duty paid by the manufacturer/dealer/importer etc.
CAclubindia
