Input service Credit

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Debasis Nayak (Querist)
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10 December 2007 One assessee is both a manufacture and a trader of the similar goods. Suppose the assessee is manufacturing shoes and selling it as well as it is buying shoes from the other manufacturer and selling it. For carrying on this business the assessee is availing some input service. My question is whether the assessee can avail the credit of the service tax paid on the input service received? Please refer any case laws or provisions to support ur answer.

Debasis Nayak

Debasis Nayak (Querist)
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10 December 2007 Please reply soon

Dayal

Dayal (Expert)
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11 December 2007 You can take the cenvat credit but can utilise only 20% of the service tax payable by you as a service provider

If you intent to use it for excise duty you will have to reverse 10% of the value of the exempt goods

Both conditions will apply where you are unable to keep a separate inventory of the service tax credit.

If you are able to identify and maintain separate records for services category wise i.e for trading and Manufacturing activity then you can utilise 100% credit against your manufacturing activity