adjustment of cenvat credit

This query is : Resolved

CA Ritu Dhawan (Querist)
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01 July 2008 a client of our is exporter and he had paid service tax on input services and has a huge amount of refund from service tax department as on 30.09.2007 and for the period 01.10.2007 to 31.03.2008 they also do work for indian comapanies also and liable to pay service tax to department
my quarry is the refund stands on 30.09.2007 can be easly setoff against tax liablity as on 31.03.2008
and can that part is also easily setoff against interest and penalty portion also

Ajay Gumbar

Ajay Gumbar (Expert)
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01 July 2008 Yes and No,

Yes - You can utilize the cenvat credit lying on 30.09.07 for the payment of service tax liability arising on service to indian companies payble as on 31.03.08

No - You cannot utilize the cenvat credit for the payment of interest or penalty since Rule 3(4) of CCR 2004 does not allow the same. You have to pay the same in Cash/cheque only.

Regards,

Ajay Gumbar.