Can cvd be utilized as credit in service tax for jobwork

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Ravi Vats (Querist)
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03 February 2016 Hi
One of my client is contractor & import marbles from foreign. He had paid CVD on valuation of goods to Custom. He also providing man power to the firms on which charging service tax.
Can he avail input credit of CVD in Service Tax Return against work contract service or man power proving service.

Thanks

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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03 February 2016 Supply of Manpower is covered under Reverse Charge Mechanism - therefore in case your client renders such services to a body corporate, he does not need to collect and pay service tax on this service. As a contractor it is likely he is rendering Works Contract Service whereby both the Service Provider and Service Recipient are liable to pay 50% of the service tax liability. The imported marble is not utilised in rendering output service of Works Contract nor can it be treated as capital goods per se. If a product is not used as an input to render the output service, the same cannot be claimed as Input Service. Since the construction of buildings, etc, are not subject to Central Excise, the impoted marble cannot be treated as input goods. Similarly since it is not a direct input for rendering the output Contractor service it cannot be treated as imported Capital Goods wherein the CVD can be utilized as Input.

Your client therefore cannot avail of the CVD paid as input either for the Works Contract Service or Manpower Supply Service.

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