Credit of stowing excise duty on coal

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Vishwajeet Mathur (Querist)
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19 July 2014 Is Credit of SED is available to the buyer. (The
remittance is credited to the Central Govt. in a special account.)It is excise duty paid to CG?

Arun Kumar Singh

Arun Kumar Singh (Expert)
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20 July 2014 The buyer can take the cenvat credit of capital goods but it should be fall under the definition of capital goods.

Vishwajeet Mathur

Vishwajeet Mathur (Querist)
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21 July 2014 Sir it is used as input.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 July 2024 Special Excise Duty (SED) is a type of duty imposed by the Central Government of India on specific goods, such as coal. It is levied in addition to the basic excise duty and is meant to raise revenue for specific purposes. Here’s a clarification on whether the buyer can claim credit for SED paid on coal:

### Credit of Special Excise Duty (SED):

1. **Nature of SED**: SED is an excise duty imposed on certain goods, including coal, and the revenue collected from SED is credited to the Central Government in a special account.

2. **Credit Availability**: As per the provisions of Central Excise Act, 1944 and rules framed thereunder, the buyer of goods on which SED is paid typically cannot avail credit of SED. This is because SED is not considered as Cenvatable credit under the Central Excise rules.

3. **Purpose of SED**: SED is generally collected for specific purposes, such as funding welfare schemes or specific government initiatives. It is not intended to be passed on as credit to subsequent buyers in the supply chain.

### Conclusion:

Based on standard excise duty rules in India, including SED on coal, the buyer cannot claim credit for Special Excise Duty (SED) paid. SED is a separate component of excise duty that is collected for specific government purposes, and it does not form part of the Cenvat credit system that allows for credit on excise duty paid on inputs used in manufacturing or trading activities.

Therefore, businesses purchasing goods subject to SED, such as coal, should account for SED as part of their cost of goods purchased, without the ability to offset or claim it as credit against their own excise duty liabilities or other taxes.