01 March 2010
We sale our finished product for 1 year warantee. This product gets some problem within 1 year(under warantee), now customer sends that product to us for free servicing, for that we procure external service on which we pay service tax(Input).
Now in this type of scenario Q (1) whether paid service tax(Input) will be claimable or not? Q (2) can we utilise this service tax with exice duty?
1. According to Service Tax Rule 2(k) defines input to mean (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service;
Explanation 1. - The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2. - Input include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer;
As far as the service provider is concerned, input means all goods, except light diesel oil, high-speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service; 2. We can utilise service tax credit with excise duty.
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