25 October 2013
The full facts of your case is not apparent from your query.
Service Tax Credit on Input Services can be utilized only to pay off Service Tax Liability on Output Services rendered, Central Excise Liability on Taxable Products manufactured and the CAD/SAD on Customs Duty.
It is not understood why a trading unit, not rendering any taxable output service nor manufacturing an excisable product would want to avail of CENVAT credit on input services.
The CENVAT Credit Rules, 2004 specifically prohibits the utilization of CENVAT Input Credit towards payment of Service Tax Liability incurred by a service recipient under the Reverse Charge Mechanism, which duty must be paid only in cash.
However, there is no legal bar in availing of CENVAT credit on the input service of shipping charges on imported goods / services whether capital goods or otherwise.
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