Credit of excise duty in service tax payable amount

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deepakkumarsingh (Querist)
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26 December 2011 Pls. Note that a Trader and also a works contractor have to file their ST-3 April-Sep'2011 (Repair Maintanance Head)Can they Adjust the Excise Duty of Exciseble Goods which is used in works Contract, in service tax payable Amount .

Imp. note that their job is not completed till date and not billing for Repare Mantainance Charge hence the Servce tax payable Amount is Zero, but Excise duty which was get from Purchase of Material from Dealer or Mfg. aprox 50,000/- ,now they wish to show this Excise Duty as a Cenvate Creidit Coloumn in St-3 ,
Pls advice me it is possible in this return or should be show in next return when Bill to be Raise.
if it not possible then what we do?

deepakkumarsingh

deepakkumarsingh (Querist)
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27 December 2011 Pls. Note that a Trader and also a works contractor have to file their ST-3 April-Sep'2011 (Repair Maintanance Head)Can they Adjust the Excise Duty of Exciseble Goods which is used in works Contract, in service tax payable Amount .

Imp. note that their job is not completed till date and not billing for Repare Mantainance Charge hence the Servce tax payable Amount is Zero, but Excise duty which was get from Purchase of Material from Dealer or Mfg. aprox 50,000/- ,now they wish to show this Excise Duty as a Cenvate Creidit Coloumn in St-3 ,
Pls advice me it is possible in this return or should be show in next return when Bill to be Raise.
if it not possible then what we do?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 July 2024 In the scenario described, where a trader or works contractor has incurred excise duty on excisable goods used in a works contract but has not yet billed for the maintenance services (and hence has zero service tax payable), there are specific considerations regarding the adjustment of excise duty as Cenvat credit in the ST-3 return:

### Understanding Cenvat Credit:

Cenvat Credit allows businesses to offset excise duty paid on inputs (like raw materials or goods used in providing services) against the excise duty payable on the final products or services. Here’s how it applies to your situation:

1. **Accrual of Cenvat Credit**:
- Cenvat credit on excise duty paid can typically be availed when the inputs or goods are received and an invoice is available.

2. **Service Tax and Works Contract**:
- In works contracts involving services, Cenvat Credit can be availed on excise duty paid on inputs used directly in providing the taxable service (in this case, repair and maintenance services).

3. **Billing and Payment of Service Tax**:
- If no billing has occurred for the repair and maintenance services (resulting in zero service tax payable), the adjustment of Cenvat credit on excise duty paid needs to be considered carefully.

### Specific Points to Consider:

- **Completion of Works Contract**: If the works contract (repair and maintenance services) is not completed and no billing has been done, it might not be appropriate to claim Cenvat credit immediately.

- **Billing Cycle**: Typically, Cenvat credit should align with the billing cycle or when the service is actually provided and invoiced. This ensures proper matching of input credit with output liability.

- **ST-3 Return Filing**: Since no service tax liability exists currently due to zero billing, claiming Cenvat credit on excise duty paid might not be feasible in the current ST-3 return period (April-September 2011).

### Recommended Actions:

1. **Future Billing**: Consider claiming Cenvat credit on excise duty paid in the next ST-3 return period when the repair and maintenance services are billed and service tax liability arises.

2. **Documentation**: Ensure all invoices and supporting documentation related to excise duty paid are maintained properly for future reference and audit.

3. **Consultation**: It’s advisable to consult with a tax advisor or chartered accountant familiar with excise duty and service tax regulations to ensure compliance and proper utilization of Cenvat credit.

### Conclusion:

Given the current status where no billing has occurred for repair and maintenance services (resulting in zero service tax payable), it may not be appropriate to claim Cenvat credit on excise duty paid in the current ST-3 return. It’s prudent to wait until the services are billed and service tax liability arises to claim the credit in alignment with tax regulations and audit requirements.

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