Service tax amt. use for cenvat/excise payment.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2012 Dear Sir,

we are manufacturing automobile parts. can we take the service tax credit for payment of excise duty ?

can we show the service tax amount in ER-1.

pls suggest.

Regards,

Raj

U S Sharma

U S Sharma (Expert)
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24 September 2012 if such services qualify as input service for manufacture of taxable goods, then surely you can take credit.

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2012 Services-
Contract Labour Bills
Telephone-Landline & Mobile Bill

?????????

U S Sharma

U S Sharma (Expert)
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25 September 2012 contract labour bills - if used towards the manufacture of taxable services, then admissible, however if used towards repair and maintainance of building then not.

telephone / mobile - if in name and address of factory of manufacture, and installed therein then only admissible.

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2012 Thank u very much !!!!

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2012 Bills of Repairs & maints-Machinery &
Security / Watchman
Courier bill
consultant bills
Testing & Calibration Bills
Transport Bill
Hotel bills

which services admissible ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Great question, Raj! You're asking whether various service tax-paid inputs can be claimed as CENVAT credit and used toward payment of Excise Duty — and whether they can be reflected in ER-1 returns.

Let’s break this down clearly.

✅ General Rule
Under CENVAT Credit Rules, 2004, input services used directly or indirectly in or in relation to manufacture of final products (on which excise duty is payable) are eligible for CENVAT credit.

You can utilize service tax credit to pay excise duty on final goods, and yes, it must be shown in ER-1 return.

📋 Admissibility of Specific Services:
Here’s a classification of your list:

Service Type Eligible for CENVAT Credit? Remarks
Repairs & Maintenance – Machinery ✅ Yes Directly related to manufacturing
Security / Watchman Services ✅ Yes (generally) If deployed at factory/premises used for manufacture
Courier Bills ✅ Yes (partially) If used for sending inputs/samples/invoices related to production; not admissible if for personal or admin purposes
Consultant Bills ✅ Depends If related to production, engineering, factory compliance — yes. If for HR/legal unrelated to manufacture — no
Testing & Calibration ✅ Yes If related to final products, raw materials, or production process
Transport Bills (Goods) ✅ Yes (with conditions) If it's input goods transport or input service for inward movement (under GTA – credit allowed if tax paid by receiver)
Hotel Bills ❌ No Treated as personal consumption or employee travel expense – ineligible

🧾 Notes for ER-1:
Yes, CENVAT credit of service tax should be shown in Part C of ER-1 return.

Specifically under “CENVAT credit taken and utilized” section.

⚠️ Caveats:
Credit can only be taken on services received by manufacturer and used for taxable goods.

You must have proper service tax invoice issued in your name/address.

For mobile/telephone bills – must be in the factory's name and installed at factory premises.

✅ Summary:
✔️ Most of the services listed are eligible for CENVAT credit if they are linked to the manufacturing activity.
❌ Personal or administrative services like hotel bills or unrelated legal consultancy are not eligible.
🧾 Yes, credit can be used for excise duty payment and must be reported in ER-1.

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