One of my friend, who is a service tax assessee, purchased two new excavators on which he has paid excise duty in F.Y.11-12, he provides the site preparation and clearance service on a contractual basis out of only one of its excavators, however second one is not put to use in F.Y.2011-12 and he collects service tax from the service receipient, now the same has to be deposited to the revenue, my query is that can he avail the cenvat credit on the purchase of both the new excavators, which is his main source of providing service, against the service tax liability? If answer is yes then please suggest the manner in which the credit is to be taken i.e. as an input - 100% or as capital goods - 50% (although it is used as an input, my guess is 50% since it is a capital good (also can be confirmed by its tariff heading))?
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