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Excise benefit if party registered with service tax

Banwari Goswami (Commercial Executive) (37 Points)

12 September 2015

Hi !

I have a query regarding service tax. My one client involved in Crane hiring business. He provide cranes on rental to customer. He registered with service tax. He purchase new cranes from manufacturer on Excisable invoice. He can take benefit of Excise against his dues with service tax. He can set off excise amount with service tax dues.

Please solve my query

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4 Replies

Aditya RVS (Practice) (221 Points)
Replied 13 September 2015

Tariff heading 8426 of Section XVI of First Schedule to the Central Excise Tariff act, 1985, contains "Cranes including Cable Cranes". As per Rule 2(a) of CENVAT Credit Rules, 2004 as amended, all goods falling under Chapter 84 are "Capital Goods".

As per Rule 3 of CENVAT Credit Rules, a provider of output service shall be allowed to take credit of the duty of excise specified in the First Schedule to the Excise Tariff Act, on any capital goods received by the provider of output service on or after the 10th day of September, 2004. The credit so taken may be utilized for payment of service tax on any output service.

Hence, in your case, as per the definition, Cranes used for providing the service of renting them are "Capital goods" as per Rule 2(a)(A)(2) of the rules.

Therefore Excise duty on the same can be utilized for paying Service Tax on the output service of hiring the cranes, subject to other conditions with regard to the invoice, date of taking credit, etc.

Please refer to CENVAT Credit rules in this regard.

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Banwari Goswami (Commercial Executive) (37 Points)
Replied 14 September 2015

We can take credit at lum sum or in parts. Mean to say We can take whole credit at lum sum or in parts. Please also clear this.

thanks

Aditya RVS (Practice) (221 Points)
Replied 14 September 2015

Credit pertaining to Capital goods can be taken 50% in the current year and the balance in subsequent year Or years.

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Prabhat Kumar (Advocate & Consultant) (1912 Points)
Replied 14 September 2015

The only requirment of availing credit is it should be used in providing output service,so you can avail the credit.As it is a capital good you can avail the credit up to 50% in a financial year(Rule 4 CCR).

1 Like