CENVAT CREDIT

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joji jose

audit manager

242 Points Posted on 04 February 2010

Dear sirs,

One of our client is a serive provider. He is doing the business of shipping services. He is collecting service tax from his clients. Presently he brought Capital goods by paying Excise duty on that. At the time of payment of service tax he had claimed the Excise duty paid on capital goods as CENVAT credit from service tax collected. Is it possible to do so?

Kindly guide me in this case

Replies (4)

Amir

Learner

4016 Points Posted on 04 February 2010

Dear Josi Jose,

Cenvat Credit of Excise Duty paid on Capital Goods can be setoff against the service tax liability.

Conditions

1) Capital Good must be specified in the Defination of capital goods under Rule 2

2) Capital goods must be used for providing taxable service (not necessarily the one against which credit is to be utilized)

3) Credit is available in 2 years - 50% each

4) Abatement should not be claimed on output service

C.Balaji

Learner

1867 Points Posted on 05 February 2010

Dear Josi Jose,

Agree with Mr.Amir brother

Cenvat Credit of Excise Duty paid on Capital Goods can be setoff against the service tax liability.

Capital Good must be specified in the Definition of capital goods

Capital goods must be used for providing taxable service (not necessarily the one against which credit is to be utilized)

Credit is available in 2 years - 50% each

Abatement should not be claimed on output service

Venkat M

FCA

133 Points Posted on 06 February 2010

Agree with Amir

Madhukar N Hiregange

Chartered Accountant

39039 Points Posted on 07 February 2010

Abataement 1/06 requires that no credit be claimed. However not.12/2003 or compostion shcemes do not require the same. The abatement notification should be seen to see if the condition of CG credit is expressly excluded. Otherwsie it would be available.