Refund of excise duty

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This query is : Resolved

Satyendra Singh (Querist)

28 June 2012 My client is dealing in laundry and drycleaning and they charge service tax from the customer but they pay excise duty on some raw materials like chemicals etc.

can they take credit of excise duty while paying service tax monthly.

RENGARAJ R.K

RENGARAJ R.K (Expert)

28 June 2012 Under cross utilization of Service tax and Excise, in my opinion, your client can claim and take credit of excise duty portion while discharging his output tax.

The condition for availing any CENVAT benefit for service tax output: The product/input services should be used in relation to providing output service. If chemicals are used in dry cleaning and if your client is paying the service tax on such services, he can claim it.

Arun Kumar Singh

Arun Kumar Singh (Expert)

28 June 2012 yes, they can take the cenvat credit of input and input services.

Satyendra Singh

Satyendra Singh (Querist)

28 June 2012 Thanks Sir,

Can we take CENVAT benefit on Fixed Assets ( Dryclean Machines) also which is utilized in drycleaning operation.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

20 July 2025 Yes, CENVAT credit can be availed on fixed assets, including dry cleaning machines, if they are used in the course of your business and for providing taxable services or manufacture of dutiable goods.

Key points to consider:
Eligibility of Input Services / Capital Goods:
CENVAT credit is available on inputs, capital goods, and input services used for manufacture of final products or for providing taxable services.
Dry cleaning machines qualify as capital goods.
Use in Business:
The fixed asset (dry cleaning machine) should be used in the operation of providing taxable dry cleaning services.
Proper Documentation:
You must have a valid invoice/bill of entry and pay the applicable duty/tax at the time of purchase.
The capital goods should be accounted for in your books.
Utilization Rules:
If the dry cleaning machine is used partly for exempted services or non-business purposes, proportionate credit may be required to be reversed.
Capital Goods Credit Timing:
CENVAT credit on capital goods can be taken upfront or spread over a period of time (usually 5 years under the excise regime).
Summary:
Dry cleaning machines used in your dry cleaning operations are eligible for CENVAT credit as capital goods.
Ensure they are used exclusively or predominantly for taxable services to avoid reversal of credit.
Maintain all necessary documents and comply with CENVAT credit rules.

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