Become a Certified GST Practitioner this February. Register Now!

Utilization of Cenvat Credit on input services in fy 10-11

Ajay.G (Service) (43 Points)

12 July 2011

Hello every one...

Can I get the detailed info. abt the following transaction related to Cenvat Credit on input services..?

A Mfg. co. is not registered under Service Tax but, received input services in fy 10-11 related to normal business activities. Co. is not a output service provider but only manufacturer of final products.

In above case, can a Mfg. co. utilize Cenvat credit on input services reced. in previous year to take set-off against Excise Duty payable on final product mfgrd. in current FY 11-12.

Kindly, provide me the details of the same.

Thanks in advance.....

Ajay

Reply
Follow
Share

2 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 13 July 2011

There is no such prescribed time limit for availing the input credit, but the prior periods credit looks inadmissible as the final accounts of the assesee got finalized without considering the input credit of such items, and if allowed now it would be a case of "unjust enrichment" i.e the assesee was not eligible for the same, he was not intending to claim but the claim was passed.

Also if you have enjoyed any value based exemption in current financial year or previous years, then the duty/input credit till the date of such exemption utilization is lapsed.

Upgrade to CAclubindia Pro. Subscribe Now!

CA SOURAV KUMAR GANDHI (B.com (H), CA ) (133 Points)
Replied 14 July 2011

Hello,

CENVAT credit can be utilised for setting of the excise duty paid on manufacture and removal of goods. suppose Mr. X has removed goods on 15.06.2010, then excise duty payable can be setoff against the CENVAT Credit balance available the end of month, whether it relates to any year. it depends whether til the end of the month you have already utilised the old CENVAT credit.

Ex. Input services received :

1.4.09 service tax paid: 5000

15.5.09 ST Paid 4150

19.12.09 ST paid 2550

goods removed: ED Payable 6000 20.12.09

so CC balance available on 31.12.09 is 5000+4150+2550 = 11700,

ED 6000

Less:CC6000

ED payable NIL

suppose again goods removed on which ED payable is8000 on 15.4.10

now for this ED CC can be utilised: balance on CC on 30.04.2010 is 11700-6000 = 5700

ED 8000

Less: CC 5700

ED payable 2300

NOTE: CC can be carry forward without any limit for the no. of years/months.

It has been assumed that the input services received are in or in relation to the manufacture of excisable goods.(necessary requirement to avail service tax paid on input services as Cenvat Credit

Hope you got cleared about your doubt.

Thanks & Reargds

Sourav Gandhi