Service tax credit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 March 2013 We are registered in both Excise as well as Service tax. We have a credit in Excise whereas we have a liability in Service Tax. Can we use the credit of Excise to offset the liability of Service Tax.

Sumit Grover

Sumit Grover (Expert)
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22 March 2013 Yup...Rule 3 of CCR,2004 allows the same

Querist : Anonymous

Querist : Anonymous (Querist)

28 March 2013 But Rule 3 CCR 2004 does not say the same. In fact it seems to imply you can only use the credit of Service Tax while filling the Excise and not the reverse. Is my understanding correct?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Your understanding is correct.

Under the CENVAT Credit Rules, 2004, the credit of Excise Duty and Service Tax are maintained in a common CENVAT account, but:

You cannot use Excise Duty credit to pay Service Tax liability.

You can use Service Tax credit to pay Excise Duty liability (subject to conditions).

Rule 3 of CCR 2004 states the utilization sequence:

Credit of Excise Duty can be used only against Excise Duty liability.

Credit of Service Tax can be used against Service Tax liability and Excise Duty liability.

But credit of Excise Duty cannot be used against Service Tax liability.

Summary:

Credit Available Can be used to pay
Excise Duty Credit Excise Duty only
Service Tax Credit Service Tax or Excise Duty

So in your case, you cannot offset Service Tax liability with Excise Duty credit. You need to maintain separate credits and payments.

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