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

CA. Vikash Chandra Jaiswal

CA. Vikash Chandra Jaiswal (Expert)
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27 September 2012 Yes,you can take Cenvat Credit on SErvice tax and use the same for payment of excise duty. You can show the same in ER-1 Also there is no restriction on the same.

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2012 Thanks for the reply....

Sir, can we avail the credit of following services ?
Contract labour bills
Consultancy charges
Security Charges
Repairs & Maints. Machinery
CA Bills
Testing & Calibration charges

till date we have not show service tax amount in ER-1 return & now can we will avail the credit from Jan-2012 ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 You're asking an important and practical set of questions regarding CENVAT credit of service tax, especially for a manufacturing unit like yours (automobile parts).

Let’s address everything step-by-step:

✅ 1. Can You Use Service Tax Credit to Pay Excise Duty?
Yes, absolutely.

As per the CENVAT Credit Rules, 2004, a manufacturer can avail credit of service tax paid on eligible input services and use it to pay excise duty on final products.

✅ 2. Can Service Tax Credit Be Shown in ER-1?
Yes. The service tax credit (CENVAT) should be reported in ER-1, typically in Part C of the return:

"Details of CENVAT credit taken and utilized"

If you haven't shown it yet, don't worry — read on for backdated claim info.

✅ 3. Are These Services Eligible for Credit?
Let’s go over your list:

Service Description CENVAT Credit Eligible? Remarks
Contract Labour Bills ✅ Yes, if related to production process (e.g., shop-floor work, packing)
Consultancy Charges ✅/❌ Depends — production-related or factory compliance = Yes; HR/legal/advisory unrelated to manufacturing = No
Security Charges ✅ Yes — if related to factory premises
Repairs & Maint. of Machinery ✅ Yes — directly related to plant/machinery used in manufacture
CA Bills ✅/❌ Depends — audit/internal control services related to manufacturing = possible; tax filing/advisory = often not allowed
Testing & Calibration ✅ Yes — directly related to raw materials or finished goods quality control

🔎 Tip: The more directly connected to the manufacturing activity, the stronger the eligibility for credit.

✅ 4. Can You Avail Credit from Jan 2012 Now (as of Sep 2012)?
Yes, you can still claim the service tax credit from Jan 2012, provided:

🔹 Conditions:
You have valid service tax invoices in your name

The invoices are within the time limit prescribed under Rule 4(1) of CENVAT Credit Rules (at that time, credit could be taken within 1 year from date of invoice — previously it was 6 months)

The services were used in or in relation to manufacture

✅ Conclusion: Yes, as of September 2012, you can claim input credit for service tax paid in Jan 2012 (and even earlier, within the one-year limit) and start reflecting it in your ER-1 from now on.

📝 What You Should Do:
Compile service tax-paid bills from Jan 2012 onward.

Classify which are eligible based on usage (production-related).

Take CENVAT credit in your current month’s return (mention opening balance as well).

Start showing it regularly in ER-1, Part C.

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