Service tax and cenvat credit of excise- manufacturer

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2012 Dear Sirs, We have manufacuturing unit at Daman(UT) and have been providing Immovable Assets on Rent Service and are collecting & paying service tax. Also, we have been paying Service Tax of GTA-Outward/Inward on Transporter behalf as service receiver. For these we have been not getting Cenvat Credit. But, for the Importing material-clearing agency service paid and bringing material of purchase for manufacture service tax have been paying & availing Cenvat Credit. So, I wanted to know weather is there any changes in this procedure or still the same? Please help and guide me, as I am new for EXCISE and SERVICE TAX/Cenvat. Thanks in advance. Regards, Abdulrahim

CA Suresh Jain

CA Suresh Jain (Expert)
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28 August 2012 There no change in CENVAT. Previously also you were eligible for CENVAT and now also you are eligible

sureshjain.nj@gmail.com

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Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2012 Dear Sir,

Thanks for your reply.

Sir, I came to know that service tax payment code also changed from 1st July'2012. We have been providing space on rent and are collecting rent with service tax 12.36% and depositing the same. So, Is there any changes in this procedure or still the same and accounting code (basic 12%) for immovable property is same or changed?. Please help in this regards.

Thanks & Regards,
Abdulrahim

Querist : Anonymous

Querist : Anonymous (Querist)

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Hello Abdulrahim,
Thanks for your detailed query. You're doing well by carefully separating the services used, and you're right to seek clarity — especially since CENVAT credit rules for manufacturers dealing with both service tax and excise can get a bit tricky.

Let’s break your situation down and answer your main concern clearly.

🏭 Scenario Summary (as per your message):
You are:

A manufacturer located in Daman (Union Territory)

Providing renting of immovable property service (and collecting + paying service tax)

Also paying GTA (Goods Transport Agency) service tax (inward & outward) as service recipient

Not claiming CENVAT on GTA

Claiming CENVAT credit on import clearing agent charges, etc., for bringing in raw materials

You want to know:

❓ Is this treatment correct or are there changes you should be aware of?

✅ Your Existing Treatment — Mostly Correct
Let’s evaluate each category:

1. Renting of Immovable Property – Output Service
You're collecting and paying service tax on rent.
✅ Yes, this is taxable under service tax law, and you are doing it correctly.

➡️ If you incur input services (e.g., property maintenance, security, cleaning, etc.) for that rented property — you can avail CENVAT credit on those input services against your output service tax liability.

2. GTA (Goods Transport Agency) – Inward & Outward
a) Inward GTA (Raw Material Transport to Factory)
✅ CENVAT credit is allowed on service tax paid by you as the service recipient — because it relates to receipt of inputs used in manufacturing.

➡️ You can and should avail credit if:

The tax was paid by you under reverse charge

You have a proper consignment note

The service is used for bringing inputs to the factory

b) Outward GTA (Finished Goods Sent to Customer)
⚠️ This is a grey area.

Per CBEC circulars and judicial rulings:

CENVAT credit is allowed only if sales are on FOR (Free on Road) basis, i.e., ownership of goods transfers at the buyer's door

If goods are sold at factory gate, then CENVAT on outward GTA is not allowed

➡️ You may want to review your sales contracts to decide.

3. Import Clearing Agency Services (CHA / C&F Agents)
✅ You are correct in availing CENVAT credit on these services used for import of inputs, as they directly relate to manufacturing.

📌 Summary of What You Can Claim CENVAT Credit On:
Service Type CENVAT Credit? Remarks
Renting of Immovable Property (output) ✅ Yes Avail input service credit against output service tax
GTA (Inward – Inputs) ✅ Yes Ensure proper documentation
GTA (Outward – Finished goods) ✅ Conditional Only if sales are FOR basis and expenses borne by you
CHA / Import-related services ✅ Yes Allowed as input services used in manufacture

✅ Recommendations for You:
Start claiming CENVAT on Inward GTA — you're eligible.

Review sales invoices — if outward transport is FOR (door delivery), you may claim credit.

Keep a CENVAT register with invoice-wise tracking.

File ER-1 returns showing the credit availed and utilized.

Maintain all invoices and consignment notes for audit trail.

📝 Tip for Beginners:
Under the CENVAT Credit Rules, 2004, any input service used in or in relation to the manufacture or clearance of final product is eligible — provided documentation and use are proper.

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