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Cenvat credit admissibility on st paid on freight inwards

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

03 October 2013

One of my client being a Pvt Ltd Co. engaged in manufacturing activities. It is registered under excise law as well as under Service Tax as Service Receiver so far Service tax on Input Freights paid to GTA. My client is paying Service tax on Freight Inwards to Transporter @ 25% on Taxable value of Freight Charges i.e.after getting abatement @ 75% thereon as per Service tax Notification under Complete RCM.

Now query is whether my client can take Cenvat Credit on such ST Paid on Freight Inwards & utilized the same for paying the Excise Duty payable on excisable Finished Goods.

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11 Replies

CA/CS Avijit Burman (employee) (67 Points)
Replied 03 October 2013

No ,once you enjoy the benefit of abatement you cannot take cenvat credit on service tax paid on GTA.

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CA/CS Avijit Burman (employee) (67 Points)
Replied 03 October 2013

u cannot use the same to discharge your excise duty liability

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 03 October 2013

Yes , you can take the credit of ST paid under RCM(25% under abatment benefit ).....

Abatement Notification generally restrict the availment and utilsation of Cenvat credit to pay St if want to claim abatement...but in your case you have paid St under abatement scheme(under RCM), so you can claim the credit of same ST paid under RCM in view of Rule 9(i)(e) of Cenvat Credit Rules,2004....Once you can book a particular Input ST as Cenvat credit then you can freely use the same to pay either output ST(except to pay under RCM cases) or Output excise....there is no restrction provided regarding the same as far as your case is concerned....

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CA Vivek Goyal (Practising CA) (148 Points)
Replied 06 October 2013

As per abatement rules the provider of GTA service can not avail Cenvat credit on Inputs, Input Services and Capital goods then abatement will be apply and taxable value of services will be 25% in this case. As per CCR, 2004, we can take the cenvat credit of Input services in this regard and inward and outward transportation is specially included in definition of input service so receiver of GTA services can take the benefit of Cenvat Credit. But the provider of GTA service can not avail any benefit as per abatement comditions. These conditions does not apply to service receiver paying service tax under RCM under GTA.

CA Vivek Goyal (Practising CA) (148 Points)
Replied 06 October 2013

Yes, you can take

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Anish kumar choudhary (Accountant Manager) (21 Points)
Replied 12 May 2015

Dear Sir,

I am working with Manufactring Co. It is registered under excise law as well as under Service Tax as Service Receiver so far Service tax on Input (on Raw) & Output (On F.G.) Freights paid to GTA and Output Freight . My client is paying Service tax on Freight Inwards (on Raw) & Outward (on F.G.) to Transporter @ 25% on Taxable value of Freight Charges.

Now query is whether my client can take Cenvat Credit on such ST Paid on Freight Inwards (on Raw) and Outward (on F.G.) & utilized the same for paying the Excise Duty payable on excisable Finished Goods.

Is it correct Take Credit If yes then in which Excise Notification we take Credit on Inward (on Raw) & Outward (On G.G.) Both which we paid Service tax.

please reply as soon as possible.

Regards,

Anish Kumar Choudhary

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 13 May 2015

@ Anish, Input services as defined under Rule 2(l) of Cenvat Credit Rules,2004 which includes outward transportation upto the place of removal, thus, transportation beyond the place of removal(factory/warehouse) is not an input service and for that credit cannot be claimed.

However,credit can be frrely claimed for inward transaction and can be set off against output ST/excise liability.

Shivam agnihotri (Accounts Manager) (21 Points)
Replied 29 September 2015

WE HAVE A PARTNERSHIP FIRM & WE ARE A SERVICE RECEIVER. WE ARE PAYING ST ON FREIGHT AFTER ABATEMENT. CAN WE CLAIM AS CREDIT THAT ST PAID ON TELEPHONE & OTHER BILLS.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 30 September 2015

All freight payment s are not subject to ST as services of transportation other than courier or GTA are in negaitve list- not liable.

Credit on GTA involves the following:

1. The restriction of credit is on the GTA ( service provider). Normally GTAs do not avail any credits.

2. As far as the reciver is concerned, he could avail the credit of ST paid under RCM on inward freight or intermeidate freight. Intermeidate frieght to job worker, depot etc is also available. As far as credit on outward freight is concerned it dependes on where the sale takes place. If the risk of delivering the goods upto customers place is with you (FOR) then credit is available. If the supply is ex factory and cusotmer picks up the goods at your factory then no credit foroutward freight wouldbe available.

deluxmechanical pvt.ltd. (1 Points)
Replied 04 March 2016

We have a Pvt.Ltd. Company & we are a service receiver. We are paying ST ON Freight after abatement can we claim as credit which we have paid aginst currier service on theire bill.