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Adv. S Sharma (Lawyer) (574 Points)

07 January 2008

Hi guys

well, my question is --- Service Provider (in cab service) purchase capital goods directly from manufacturer and paid excise duty on that capital goos.

how can he take credit of duty on that Capital Goods because he is not manufacturing any thing but only providing service, u can say cab service.

Can Service Provider adjust the duty on the in the output service which he will charged/collect from customers or recever of service ?

Guys I am new in this service tax field, so dont mind if my question is wrong. actly I am trying to understand the whole concept of this field, thats why I am asking.

thx nd warm regards

Adv. Sachin Sharma

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12 Replies

som kansal (chartered accountant) (307 Points)
Replied 07 January 2008

hi sachin when u r to pay ST on the output service, the excise duty paid on capital goods can be very well adjusted. but the concept is: when an assessee pays excise duty on capital goods, he can take 50% of such duty paid in the first year of installation and balance 50% in any of the next years. so, you can take 50% of duty paid on capital goods now, while pay tax on output service and the balance 50% in any of the next years

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Adv. S Sharma (Lawyer) (574 Points)
Replied 07 January 2008

hi

thx nd warm regards
Adv. Sachin Sharma

suman nvss y (article assitant) (147 Points)
Replied 07 January 2008

yes he can avile subject to 50% inthe first year and rest of 50%he can take in subsquent periods

Adv. S Sharma (Lawyer) (574 Points)
Replied 07 January 2008

hi thx it means excise duty and service tax can be adjusted wiith each other. VAT on input nd output can be adjusted with each other bt not wid excise duty or service tax. am I right sir????? well is custom duty is adjusted with excise duty or service tax liability ? thx nd warm regards Adv. Sachin Sharma

Mahesh (CA) (63 Points)
Replied 07 January 2008

Dear Sachin what have mentioned above is absolutely right. but in your case....output service is 'Rent -a- cab', if i have not mistaken. In this case you have abetment up to 60% from taxable value. When u r claiming this benefit....U CAN NOT CLAIM CENVAT CREDIT ON INPUT SERVICES /CAPITAL GOODS

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Adv. S Sharma (Lawyer) (574 Points)
Replied 08 January 2008

hi sir sir u actly gt d point, plz tell me in detail sir regarding abatement nd all these ting. i'll gr8full to you. actly I am new in this field, plz giv sime light to clear the concept thx nd warm regards

Mahesh (CA) (63 Points)
Replied 08 January 2008

Dear Sachin....wll be happy if u call me by name.... anyways...u can refer circular from CBEC site i.e. www.cbec.gov.in ---->service tax----->Nofication No. 1/2006 S.T. dated 01.03.06

satya (Executive Excise) (1839 Points)
Replied 15 October 2008

Hello Sirs, Appeal Commissioner fixed a stay petition pre deposit amount. in respect of wrong availment of certain services case. Can we debit in Service Tax cenvat credit a/c.(we are having sufficiant amount in Service Tax Credit A/C) intead of paying Cash through GAR-7 Challan.

Please give experts reply,

dsn

Mahesh (CA) (63 Points)
Replied 16 October 2008

DSN,

As per the CENVAT Credit Rules 2004, Rule 3(4)

The CENVAT credit may be utilised for payment of -

1. any duty of excise on any final product; or

2. an amount equal to CENVAT credit taekn on inputs if such inputs are reomved as such or after being partially processed; or

3. an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or

4. as amount under sub-rule(2) of rule 16 of Central Excise Rules, 2002;or

5. service tax on any output service

It appears from the provisions for utilisation of cenvat credit, it could not be ustilised other than purpose mentioned above. Hence, irrespective of balance in cenvat credit, you can not ulitilised that for the purpose other than above.

Therefore, predeposit is always needs to be deposited by Cash i.e. by GAR -7 only

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 16 October 2008

Originally posted by :Adv. S Sharma
"	Hi guyswell, my question is --- Service Provider (in cab service) purchase capital goods directly from manufacturer and paid excise duty on that capital goos. how can he take credit of duty on that Capital Goods because he is not manufacturing any thing but only providing service, u can say cab service.Can Service Provider adjust the duty on the in the output service which he will charged/collect from customers or recever of service ? Guys I am new in this service tax field, so dont mind if my question is wrong. actly I am trying to understand the whole concept of this field, thats why I am asking.thx nd warm regardsAdv. Sachin Sharma	"

The motor vehicle credit is available for the rent a cab scheme operator. However he should not avail the abatement of 60/75%. He would be required to pay the ST on the gross amount. Unless the service reciver is able to avail the credit this may not be a wise proposition.

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(Guest)

we are now taking 50% + 50% credit on capital goods. but my question is can we take 100% credit of spares parts which is to be fitted in the main machine containing chapted No. 84.

satya (Executive Excise) (1839 Points)
Replied 28 November 2008

Dear Santhosh Kale,
"	we are now taking 50% + 50% credit on capital goods. but my question is can we take 100% credit of spares parts which is to be fitted in the main machine containing chapted No. 84.	"

You may not allowing to take 100% Credit on Capital Goods irrespective of chapter heading.

here I am giving detail rule,

Under Rule 4 of Cenvat Credit Rules 2004, conditions for allowing Cenvat Credit is

(a) The CENVAT credit in respect of capital goods received in a factory or in the premises of

the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year:

Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year.

(b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading No. 68.02 and sub-heading No. 6801.10 of the First Schedule to the Excise Tariff Act, are in the possession of the manufacturer of final products, or provider of output service in such subsequent years.

with rgs,

d.satya