Cenvat on Input used on Exem goods(used for output service)

This query is : Resolved

Nilay Popat (Querist)
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01 July 2011 PLEASE PLEASE READ FULL QUERY.

one firm provide services under category 'Supply of Tangible Goods' using exempted capital goods.

Such capital goods are manufactured using various inputs. Cenvat credit on such input is utilized for output service tax payment.

Now the question is

can one take cenvat credit on inputs used for manufacturing exempted capital goods which are in turn used as intermediate goods for providing taxable service (supply of tangible goods).?

If yes/no how/why.

The Hon Supreme Court, in the case of CCE Vs Solrais Chemtech Limited (2007) 214 ELT 481 (SC) has held that even though intermidiate product is non-excisable, being used for manufacture of taxable GOODS, modvat credit on inputs used for such intermediate product is allowed.

CAN WE CONSIDER TAXABLE GOODS AND TAXABLE SERVICE ON THE SAME FOOTING FOR CENVAT PURPOSES.??

SINCE CENVAT CREDIT FOR GOODS AS WELL AS SERVICE WHAT WILL BE THE CORRECT POSITION.?

THANKS IN ADVANCE

NILAY

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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03 July 2011 May not be possible though the logic is ok as credit for ST is only if used for provding taxable service.

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