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Discussion > Excise >

Cenvat Credit on CVD

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CA

[ Scorecard : 103]
Posted On 18 September 2008 at 19:35 Report Abuse

 We are importer of Computer Hardwares. We pay following duties of cutoms on value of the imports.

 

Counter vailing duty

Additional duty of custom

Duty handling fee

Education cess

S.tax 12.00 %

Education cess 2.00%

Higher education cess 1.00%

 

We sell these products in India after charging VAT on the same. We also provide services in connection to installation of these components to the client and charge separately for that alongwith Service tax.

 

We want to know that Can we claim the benefit of any of the above custom duties paid against the service tax and if yes, under which head?

 

We have also come to know that we can pass on the benefit to claim the CVD to the customer if we raise the CENVATable invoice. This invoice can be raised only if we are registered under Central Excise Act as ‘First Stage Dealer’. Please let us know the procedure of registration and implications of the registration. What all are the records that we need to maintain if we register as First Stage dealer? What are the other related rules for ‘First Stage Dealers’? and what other benefits/disadvantages are there? What all returns are required to be filed after registration?

 

Can my customer claim CVD back in cash or he can take only set-off against the excise duty/service tax? Do we need to disclose the original import invoice to our customers? If he customer is in SEZ who does not have any duty liability, can he claim the CVD back in cash?

 

Is there any other way, such as at the time of importing we can directly endorse the invoice in the name of customer and he can claim CVD back?

 

If the Hardware Components purchased by the customer is capitalized by the customer, then what is the accounting treatment he should do? Can he claim depreciation benefit on the whole amount of capital purchase? And claim duty ?

 

Does he have to claim duty in phases over 2 years (i.e. 1st year 50% and rest in 2nd year?)

 

Is there any other harm in claiming duty back, such as if we do not claim the benefit of credit, we get depreciation deduction under income tax @ 33.99% of depreciation amount?

 

Is there any duty of custom that we/our customer can claim back? What is the rationale behind giving back this credit by the government?


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(Guest)
Posted On 19 September 2008 at 13:13

Dear Rashmi,

You have to be registered with the Central Excise Dept. for taking credit of the Customs duty paid by you.  The following duties paid can be taken credit by you & the same can be passed on to your customer as "Billable Excisable Duty" under Cenvatable Invoice. 

Counter vailing Duty (CVD) @ 14%

Education Cess @ 2% on CVD

Hr. Edu. Cess @ 1% on CVD

Additional duty of custom @ 4%

I don't think your Customers can claim the above duty passed on by you in CASH. 

As regards SEZ customers, since you already pay the customs duty & then you are passing on the same to the customer, you will have to levy the same while invoicing.  They can in turn take credit of the same.

Once you are registered with the Central Excise, you will have to maintain RG-23D Register for imports & for sales (Credit & debit of the above mentioned duties). 

Trust the above is clear. 





Rashmi
CA

[ Scorecard : 103]
Posted On 19 September 2008 at 14:21

Originally posted by :Guest
" Dear Rashmi,

You have to be registered with the Central Excise Dept. for taking credit of the Customs duty paid by you.  The following duties paid can be taken credit by you & the same can be passed on to your customer as "Billable Excisable Duty" under Cenvatable Invoice. 

Counter vailing Duty (CVD) @ 14%

Education Cess @ 2% on CVD

Hr. Edu. Cess @ 1% on CVD

Additional duty of custom @ 4%

I don't think your Customers can claim the above duty passed on by you in CASH. 

As regards SEZ customers, since you already pay the customs duty & then you are passing on the same to the customer, you will have to levy the same while invoicing.  They can in turn take credit of the same.

Once you are registered with the Central Excise, you will have to maintain RG-23D Register for imports & for sales (Credit & debit of the above mentioned duties). 

Trust the above is clear. 
"



Raj Chitroda
Accounts

[ Scorecard : 90]
Posted On 25 September 2008 at 21:24

We are importer of Construction Equipments. We pay following duties of cutoms on value of the imports.

 
Counter vailing duty
Additional duty of custom
Duty handling fee
Education cess
S.tax
Education cess
Higher education cess
 
We  are providing services by  these products in India after charging Servuce Tax  @ 12.36% on the same. 

We want to know that Can we claim the benefit of any of the above custom duties paid against the service tax and if yes, under which head?

Please provide the details of input process and if availablve the cerculation also.




gopi
job

[ Scorecard : 30]
Posted On 26 September 2008 at 12:43

hi,,,

we r importing software licenses from Singapore. we have to bear CVD while importing.  inturn while selling to our customers domestically we r charging VAT & Service Tax. can we set off the CVD paid on import & Service Tax collecting from our customers?

if so pls mention the relavent Act Clause/Section?

 

 

 




Chandra Sekhar P
Finance

[ Scorecard : 107]
Posted On 26 September 2008 at 16:09

 

Ms Rashmi

You cannot take credit of customs duty paid (countevailing duty) on input  towards payment of service tax as the input service tax includes service tax and Edn. Cess only.

The amount of service tax paid by you to a CHA for clearing of goods from customs can be availed against out put service tax.

Your customers cannot take duty paid by you in cash.

If you register your self with the central excise authority ( if and only if your final product is excisable product), then you can directly issue tax invoice. You will become a manufacturer. In this case, you can avail counter vailing duty paid as CENVAT.

You cannot be a first stage dealer, because a first stage dealer is one who buys directly from manufacturer, importer, stock point of manufacturer etc.,

You did not mention whether the imported articles/components are sold directly or after assembling into excisable products.

If your customer capitalizes the hardware components, he can claim depreciation. If he wants to avail the Cenvat passed by u ( mind u if and only if your final product is excisable product and u got your self registered  with Central excise authorities) can be claimed as CENVAT by the customer. He needs to deduct this CENVAT component from the capitalized value of asset for claiming depreciation. this is becuase fo sec 32 of income tax act, which does not allow depreciation on CENVAT component of capital goods value.

ONce your customer capitalizes the hardware components, he need to take CENVAT credit in two parts as you said inthe query.

Regarding last 2 points, I need some updation.

Chandra Sekhar P




(Guest)
Posted On 30 September 2008 at 14:39

Dear Rashmi

may i want to know duty calculation for DTA,EOU & R & D centre

Utkarsh




Prakash
Business

[ Scorecard : 51]
Posted On 12 October 2008 at 09:53

Hello,

A client is based in Mumbai and imports Readymade Software from USA. They are charged CVD & Octroi. They sell these readymade software in India and charge VAT @ 4% (for local as well as outside Mumbai) to clients. To some buyers, they offer installation of the software FREE.

I wish to know:

- Is Octroi chargeable on import of readymade software ?

- Are they liable to charge Service Tax from the customers here, although the software is readymade ? Also, if installationn is considered as service, even though it is offered FREE ? Are they still liable to charge Service Tax and if so, then at what rate ? If they charge Service Tax, then are their customers also liable to cut TDS from their payment ? And again, are they (importers) too liable to cut TDS from the supplier's payment made against import purchases ?

Waiting for expert opinions.

Best regards,

Prakash




(Guest)
Posted On 20 October 2008 at 17:59

Can import duty i.e. Basic Customs Duty , CVD etc  can be used to setoff against Excice Duty




(Guest)
Posted On 23 October 2008 at 13:18

We are importing some equipments which is further processed, it is treated as manufacture under Excise act.

Please let me know which portion of Customs Duty could be setted off against Excise duty Payable.



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