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Cenvat credit of services

Ajay Aggarwal (Proprietor) (48 Points)

13 August 2012

We have set up a new Factory with fresh Excise Registration. My question that can we take Cenvat credit on input services on capital goods & other input services before start of commercial production?

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8 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 13 August 2012

Input servies relating to setting up of factory do not qualify for cenvat credit.

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 13 August 2012

@ CA Unnikrishnan Nair NSir , please quote the relevant rule of CCR

Thanks

Ajay Aggarwal (Proprietor) (48 Points)
Replied 13 August 2012

Thanks Mr. Unnikrishnan...Kindly advice the relevant rule which says that CENVAT Credit of Services on capital goods cannot be claimed?Also advice if we can take cenvat creadit of excise duty on capital goods before commencement of commercial production? pls aadvice relevant rule.

Ajay Aggarwal (Proprietor) (48 Points)
Replied 14 August 2012

can anyone advice the relevant rule in this regard?

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 14 August 2012

Rule 3. CENVAT credit. ---(1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of –

https://www.cbec.gov.in/excise/cxrules/new-cenvat-rules.htm

so unless the factory is considered as manufacturer of final products or provider of taxable service NO CREDIT is admissible,

here the commercial production is not commenced, hence for revenue the factory may be registered but not dutiable for goods or services,

if any credit is found availed, the same would be recovered with interest and penalty.

Ajay Aggarwal (Proprietor) (48 Points)
Replied 14 August 2012

However, the Input Service definition says "input service" means any service,- 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, inward transportation of inputs or capital goods and outward transportation upto the place of removal; Pls advice in relation to above deifiniton, cnt we take credit of services in relation to capital goods before start of commercial production?

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 14 August 2012

ii)

used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

This line is also written there before the definition.

Ajay Aggarwal (Proprietor) (48 Points)
Replied 14 August 2012

Yes so services received in relation to capital goods before start of commercial production will also fall in category of " in or in relation to manufacture of final product"