Regarding cenvat of service tax in manufacturing sector
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 August 2013
Dear Friends,
I am working with a manufacturing com. where excise duty is applicable. Please guide me about service tax rule in manufacturing sector eg. we deposit service tax on freight inward outwards and adjust with input service. but when we debit service tax amount in 23A part-ii register. please explain in detail.
thanks
I am working with a manufacturing com. where excise duty is applicable. Please guide me about service tax rule in manufacturing sector eg. we deposit service tax on freight inward outwards and adjust with input service. but when we debit service tax amount in 23A part-ii register. please explain in detail.
thanks
08 August 2013
After the payment of service tax you can take the cenvat credit for duty payment of excise. Outward transportation upto the place of removal is eligible.
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 August 2013
Dear Arun ji
please tell me service tax rule in manufacturing sector such as when service tax debit & credit in 23A part-II and which service is eligible for input service please tell me in detail because i have no knowledge of service tax in excise
please tell me service tax rule in manufacturing sector such as when service tax debit & credit in 23A part-II and which service is eligible for input service please tell me in detail because i have no knowledge of service tax in excise
20 July 2025
Got it! You want a detailed explanation about CENVAT credit of service tax in the manufacturing sector, specifically how to handle service tax in ER-1 / 23A Part-II registers and which services qualify as input services.
1️⃣ What is CENVAT Credit?
CENVAT Credit allows manufacturers to claim credit of service tax paid on input services which are used in the manufacture of dutiable goods.
This credit can be adjusted against the output excise duty payable.
2️⃣ Relevant Registers:
ER-1 / 23A Part-II register is used to record service tax paid on input services which are eligible for credit.
Part-I records the input services received and service tax paid.
Part-II records the utilization of credit against output excise duty.
3️⃣ When to Debit and Credit in 23A Part-II Register?
Debit (Credit Utilization):
When you utilize the CENVAT credit of service tax to pay output excise duty, you debit the amount in Part-II (i.e., credit is used).
Credit (Credit Accumulation):
When you pay service tax on input services, you credit Part-II as you accumulate CENVAT credit.
In simpler terms:
Transaction Entry in 23A Part-II Register
Service tax paid on input services Credit (Addition to credit)
Credit utilized to pay excise duty Debit (Utilization of credit)
4️⃣ Which Services Are Eligible for CENVAT Credit in Manufacturing?
Common input services eligible under CENVAT rules include:
Freight (inward transportation of inputs/raw materials)
Transportation of finished goods up to place of removal
Rent-a-cab services (if used for business)
Consultancy, professional services related to manufacturing
Security services
Power and electricity services (where service tax is applicable)
Cleaning services related to factory
Note: Outward freight (transportation of finished goods beyond place of removal) is not eligible.
5️⃣ Example:
You pay service tax on inward freight of ₹10,000.
You record this credit in 23A Part-II (Credit side).
When you pay excise duty of ₹50,000, you utilize ₹10,000 credit against it.
You record this utilization in 23A Part-II (Debit side).
1️⃣ What is CENVAT Credit?
CENVAT Credit allows manufacturers to claim credit of service tax paid on input services which are used in the manufacture of dutiable goods.
This credit can be adjusted against the output excise duty payable.
2️⃣ Relevant Registers:
ER-1 / 23A Part-II register is used to record service tax paid on input services which are eligible for credit.
Part-I records the input services received and service tax paid.
Part-II records the utilization of credit against output excise duty.
3️⃣ When to Debit and Credit in 23A Part-II Register?
Debit (Credit Utilization):
When you utilize the CENVAT credit of service tax to pay output excise duty, you debit the amount in Part-II (i.e., credit is used).
Credit (Credit Accumulation):
When you pay service tax on input services, you credit Part-II as you accumulate CENVAT credit.
In simpler terms:
Transaction Entry in 23A Part-II Register
Service tax paid on input services Credit (Addition to credit)
Credit utilized to pay excise duty Debit (Utilization of credit)
4️⃣ Which Services Are Eligible for CENVAT Credit in Manufacturing?
Common input services eligible under CENVAT rules include:
Freight (inward transportation of inputs/raw materials)
Transportation of finished goods up to place of removal
Rent-a-cab services (if used for business)
Consultancy, professional services related to manufacturing
Security services
Power and electricity services (where service tax is applicable)
Cleaning services related to factory
Note: Outward freight (transportation of finished goods beyond place of removal) is not eligible.
5️⃣ Example:
You pay service tax on inward freight of ₹10,000.
You record this credit in 23A Part-II (Credit side).
When you pay excise duty of ₹50,000, you utilize ₹10,000 credit against it.
You record this utilization in 23A Part-II (Debit side).
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