Service Tax Cenvat Credit

This query is : Resolved

P.Saravanan (Querist)
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26 June 2008 Dear Friends,

Please clarify the following

The assessee is a manufactuing co and not a service provider. The co has liable to pay the service tax on (freight) carriage outward.
1.Is it the co can set off its service tax credits taken for paying the service tax on carriage outward?

2. For the service tax liability (i.e service tax on carriage outward) can it set off against the cenvat on excise on inputs.

Thanks &Regards
P.Saravanan

CA. C V SURYAM

CA. C V SURYAM (Expert)
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26 June 2008 Mr.P Saravanan,

You can take abatement and pay the service tax. This service tax is eligible for Cenvat credit in the following circumstances.
1) If the transport is engaged for inward transportation i.e., for bringing the materials etc. into your factory.
2) If the transport is engaged for outward transportation i.e., for clearance of your finished goods from your factory but subject to the following conditions:
a) If your CE invoice depicts separately the price and ED on price; freight and ED on freight separtely and paid ED; and
b) Even if your CE invoice shows that price is inclusive of all including freight and paid ED accordingly.

That means, such cenvat credit is not avaialbe for factory gate sales.

Delivery shoudl be at customers' place.

Bi

P.Saravanan

P.Saravanan (Querist)
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27 June 2008 Many Thanks Mr. C.V. Surayam

Sir, as per your clarification, if the deilvery is done by manufacturer then the co is eligible to take on cenvat credit on the service tax payments.Please correct me if I am worng.

I also need of clarification on setting of the tax liability with

1.Service tax - cenvat credits (i.e cenvat credits taken from the input services) that means the available cenvate credits from the input services can it be used to set off the service tax payments on carriage outward/ inward

2. For the payment of service tax liability , shall the company utilse the cenvat credits taken from the input- raw material

If you give early clarification on this highly appreciated.

Thanks & Regards
P.Saravanan