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Cenvat credit for manufacturer?

Proud to be Indian (Articled) (65 Points)

15 March 2016

1.A manufacturer pays service tax under GTA, can he take CENVAT credit of input services??

2. Can CENVAT credit of Service tax setoff against excise duty payable or vice versa??

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4 Replies

Amit M Bafna (74 Points)
Replied 15 March 2016

Input can be claimed only after payment of ST under GTA.Yes service tax and excise duty can be setoff against each other.

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Amit M Bafna (74 Points)
Replied 15 March 2016

Service tax is applicable under Reverse charge Mechanism. Input can be claimed only on RCM paid for frieght inwards and not on freight outwards has in case of freight outwards the service is received after the removal of goods from factory premises.

(Guest)

Manufacturer can take cenvat credit of service tax paid on input service taken for

Inward transportation of Inputs or capital goods

Outward transportation upto Place of Removal of goods

After payment of service tax

Mode of Transportation -GTA

“Rule 2(l) – “Input Service” means any service, –

(i)used by a provider of output service for providing an output service; or

(ii.) used by a manufacturer, weather directly or indirectly, in or in relation to manufacture of final products and clearance of final products upto place of removal,

and includes services used in relation to modernization, renovation and repairs of factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto place of removal, procurement of inputs, accounting auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto place of removal;”

On perusal of the above definition it is crystal clear that credit on freight outward upto place of removal is available to the manufacturers. But now question arises as to what/where should be the ‘place of removal’ for the manufacturer, weather it should be factory gate or upto the destination of the customers, as this has not been defined in the CENVAT Credit Rules, 2004. ‘Place of Removal’ has been defined under section 4(C) of Central Excise Act, 1944 as under:

“(C) “place of removal” means –

(i) a factory or any other place or premises of production or manufacture of the excisable goods ;

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty;

(iii) a depot, premises of consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;