Is services tax paid on services taken on R and D segment be available for cenvat credit against excise duty payable on manufacturing segment
Plz provide ur opinion in light of relevant sections assuming that both R and D segment and manufacturing segments are part of same plant.
7 Replies
Sourabh
(67 Points)
Replied 10 May 2007
Thanx Mr. Tony for reply
but sir plz quoe any specific section or notificaion
but sir plz quoe any specific section or notificaion
Anilsingh
(16 Points)
Replied 10 May 2007
Ye , we can take Cenvat credit on ST paid on R&D activities carried out at Mfg. Plant & if can be proved that it is linked or contributing to mfg. of the product made by that unit .(Ref. to Cenvat Rule 2004 defining the Input service), which says like that
Input service means any service
" (ii) used by the manufacturer, whether directly or indirectly in or in relation to the manufacture of the final product and clearance of final product form the place fo removal''
The cenvat credit taken can be adjusted against duty payable on clearence of final products.
Input service means any service
" (ii) used by the manufacturer, whether directly or indirectly in or in relation to the manufacture of the final product and clearance of final product form the place fo removal''
The cenvat credit taken can be adjusted against duty payable on clearence of final products.
Anilsingh
(16 Points)
Replied 10 May 2007
pl. read the message carefully u find the ref. cenvat credit rule-2004
Rishi
(13 Points)
Replied 10 May 2007
No credit can not be availed on R& D material because R&D is not in relation with manufacture of product. R & D is nothing to do with manufacture of final product and therefore no credit will be allowed.
Balaji
(13 Points)
Replied 10 May 2007
If you carefully go through the defination it also contains that service tax paid on activities relating to business and services availed for setting up of plant also eligbile for .
Service tax credit is broad than excise and there is no need to define input output relation.
If R&D is for product line in which company is operating one can certainly claime credit
If R&D is general(not specific to any plant) then you should take registration under service distributor, here againe rules are liberal there is no condition on basis for credit distributed, So you may apply any base, better apply turnover.
---------------------------------------------
(l) "input service" means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services ""used in relation to setting up"", modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, ""activities relating to business"", such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
(m) "input service distributor" means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be;
---------------------------
Regards
balaji
Service tax credit is broad than excise and there is no need to define input output relation.
If R&D is for product line in which company is operating one can certainly claime credit
If R&D is general(not specific to any plant) then you should take registration under service distributor, here againe rules are liberal there is no condition on basis for credit distributed, So you may apply any base, better apply turnover.
---------------------------------------------
(l) "input service" means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal, and includes services ""used in relation to setting up"", modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, ""activities relating to business"", such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
(m) "input service distributor" means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be;
---------------------------
Regards
balaji
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