CENVAT credit after two years of closure of business

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Chintan Shah (Querist)

16 April 2010 Dear Expert collegues,

I have a client which is a company which used to render services two years ago, say 'SERVICE A'. It ceased to render SERVICE A before two years. Now at that time it had cenvat credit of Rs. 2 Lacs receivable which remained unutilized. In the current financial year the company has started rendering "SERVICE B' which is a taxable output service. The client wants to utilize the credit of Rs. 2 Lacs for paying the service tax on SERVICE B. Is such a setoff possible? During the interim period of two years the company was in existence and the client has also filed service tax nil returns for the the respective quaters and has brought forward the credit in the current quarter.

Is there any restriction on the utilization of credit in terms of time within which it can utilized?

Since the inputs on which duty has been paid are not to be used in rendering the SERVICE B, than also credit can be taken on such duty paid on inputs used to render SERVICE A?

Please answer the aforesaid with proper reasoning...

Thanks in advance,

Chintan

Madhukar N Hiregange

Madhukar N Hiregange (Expert)

17 April 2010 There is no bar on utilising the said credit as there is no one to one corelation in cenvat credit. Decisions in central excise maybe referred in case of any queireis from dept.

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