Service Tax credit under ISD

This query is : Resolved

Manish Yeshwant Warudkar (Querist)
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12 February 2008 We are manufacturer of pharmaceuticals products falling under chapter 30 and getting goods manufactured at our own plant as well as from various Loan Licenses.

Further, we are availing cenvat credit on duty paid inputs as well as on input services received by us at our own manufacturing plants. Also we are registered as Input Service Distributor at HO and availing Service Tax Credit on inputs services received by us and then we transfer such accumulated Service Tax Credit to our various own manufacturing plants for payment of excise duty.

At Loan Licensee’s end inputs required for manufacturing our goods are provided by us and cenvat credit is accordingly availed by them for discharging duty liabilities and deficit amount is provided to them which is deposited by them at their jurisdictional bank through GAR 7 and duty is paid accordingly on goods manufactured for us.

Query

1. Can HO of manufacturer transfer Service Tax Credit accumulated under ISD to Loan Licensee’s / Job Worker for payment of Central Excise Duty instead of funding by way of Cheque ?

2. If yes, then under what provisions of the law?

annapurna

annapurna (Expert)
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28 March 2008 Input service distributor means an office of the output service provider which receives the invoices under rule 4A of the service tax Rules towards purchase of input services and issues invoice/bill/challan for the purpose of distributing the credit of service tax paid on the said services to the actual povider of output service (the unit which provided the output service). As per my view the HO manufacturer cannot transfer service tax accumulated under ISD to loan licensee/ job worker for payment of central excise duty.