01 March 2017
My company is in manufacturing of electrical parts. Aside from this we are also doing construction of building for a third party. 3rd party is a company. While raising the invoice we are charging service tax on 40% value of invoice as per Rule 2A(ii) of Service tax (determination of value) rules 2006. It is original contract. The service tax charged from customer is paid to govt. via CENVAT (not in cash). The CENVAT used belongs to inputs & input services of manufacturing not of construction. Now Superintendent of excise is telling that it is not allowed as one to one relation is not satisfied. But as per me, we are manufacturers - hence, as per CENVAT credit rules 2004 - Rule 3(4)(e) we can discharge the liability through CENVAT. Kindly suggest.
03 March 2017
The link provides the news & a persons view. I require some case law or CESTAT judgement on the basis of which i can argue with the superintendent. For interpreting rule 3(4)(e) - they are relying on definition under Rule 2(L) CENVAT credit rules amended in 2012. And also they are telling the Rule 3(4)(e) is general where as Rule 2A(ii) of Service tax (determination of value) rules 2006 is specific and in its explanation it has mentioned that credit can be taken of input services only relating to construction, hence from manufacturing i cannot utilize the credit.
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