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excise credit in case of trader

CA O.P. SINGH (O P Singh & Co.) (426 Points)

14 November 2007

dear all

can a trader avail excise credit of his inputs against his taxable services or can he postpone excise credit to next customer who is manufacturer..

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2 Replies

Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 14 November 2007

A trader can avail Credit of Excise Duty paid on inputs and, and service tax paid on input services for providing taxable output services.

Since trading is not a notified taxable service, the eligibility of cenvat credit utilisation is limited to 20% of service tax liability.

For instance if your liability of service tax is Rs. 100/- then you can utilise only Rs. 20/- of the credit available with you.

And the balance untilised credit can be carried forward to subsequent months in the similar pattern of utilisation.

The provision of Rule 6 of Cenvat Credit rules 2004 will apply towards utilisation as explained above.

You cannot transfer the credit to a manufacturer as you being the recepient of the services and goods

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Vijay K. Agrawal (Service) (608 Points)
Replied 21 November 2007

Dear Dayal, I have different view becuase rule 6 is applicable when you are using input or input service in both exempted as well taxable service. in my view trader will be registered as either as First stage or Second stage dealer.for excise purpose. and for service tax he will be registered for particular service he is providing. this rule is applicaple when he is also trading some other goods which are non taxable