Service tax dealer & excise dealer
This query is : Resolved
25 February 2014
Can a trader (who is a service tax dealer) obtain the sales with Excise Duty without having any excise registration, he has only service tax registered.
I have received a Invoice for Scrap, the seller has a engineering co. & holding a service tax licence. He put excise duty @ 12.36 % on Invoice. Is this can happen?
I have received a Invoice for Scrap, the seller has a engineering co. & holding a service tax licence. He put excise duty @ 12.36 % on Invoice. Is this can happen?
25 February 2014
Dealer can trade the excisable goods without registered with excise but he can not issue cenvatable invoice. Dealer can be registered with excise and service tax if he want both activity.
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25 February 2014
Thanks Mr. Singh, but the duty involved in Invoice can be used as Input Duty? He is not registered with Excise. One more point, In invoice beside duty, he write as "Cenvat credit earlier availed by us and reversed pursuant to Rule 3(5) of the Cenvat Credit Rules 2004."
Kindly give some light upon this.
Kindly give some light upon this.
26 February 2014
Service provider is registered under service tax and pay the duty of service tax they can avail the cenvat credit of inputs used in the providing of output services.
27 February 2014
Thanks, but you can't answer my query.
27 February 2014
Thanks, but you don't answer my query.
24 July 2025
### **Clarification on Service Tax Dealer & Excise Duty**
It seems like you're dealing with a scenario where a **trader registered under service tax** has received an invoice that includes **excise duty**, but the **supplier is not registered under excise**. Let's break it down and address each part of your query.
---
### **1. Can a Service Tax Dealer Trade Exciseable Goods Without Excise Registration?**
* **Excise Duty on Goods**: Generally, any **manufacturer** or **dealer** involved in the sale of exciseable goods needs to be registered under **Excise Duty** if they are manufacturing or trading in exciseable goods. A **service tax dealer** (who is not registered for excise) cannot legally **collect excise duty** and pass on **Cenvat credit** unless they are also registered under **Excise**.
* **Can a Trader Sell Exciseable Goods Without Excise Registration?**:
Yes, a **trader** (who is buying and selling excisable goods but not manufacturing them) **does not need to be registered under Excise** for trading purposes. However, such a trader **cannot issue a cenvatable invoice** to their customer because they are not registered under excise.
* If the goods are being sold without **excise registration**, the dealer is essentially **acting as a non-registered dealer**. **Excise duty should not be charged on such goods** unless the seller is properly registered with the excise authorities.
---
### **2. Invoice Received with Excise Duty but Seller Not Registered with Excise**
You mentioned that the **seller** (who is not registered under excise) issued an invoice with **excise duty at 12.36%** on scrap, and also mentioned **"Cenvat credit earlier availed by us and reversed pursuant to Rule 3(5) of the Cenvat Credit Rules, 2004"**.
#### **Key Points to Address**:
* **Excise Duty Charged by Non-Registered Seller**:
* If the seller is **not registered under excise**, they **should not** be charging excise duty on the goods. If they are doing so, it's a **violation of excise law** because only **registered manufacturers** or **dealers** (registered under excise) can legally charge excise duty and pass on Cenvat credit.
* **Invoicing with Excise Duty**: A non-registered dealer cannot pass on excise duty through an invoice unless they are specifically authorized to do so by the excise authorities, which is usually not the case.
* **Cenvat Credit Reversal**:
* The seller has mentioned reversing Cenvat credit **pursuant to Rule 3(5)** of the **Cenvat Credit Rules, 2004**. Rule 3(5) refers to the situation where **capital goods or inputs** (on which Cenvat credit was availed) are **removed from the premises** for sale or otherwise. In such a case, the credit is required to be reversed.
* If the seller has already availed Cenvat credit on inputs (perhaps on scrap or materials used in manufacturing), and the goods are being sold, the **Cenvat credit** must be **reversed**. But this reversal would apply to a **registered excise dealer**, not a non-registered one.
---
### **3. Can You Use the Excise Duty as Input Duty?**
Since the seller is **not registered under excise**, **you (as the buyer)** will not be able to **claim Cenvat credit** on the excise duty paid. The **Cenvat credit mechanism** allows businesses to take credit for **excise duty** paid on inputs or capital goods used in manufacturing or business, but only if the seller is a **registered excise dealer** and issues a **proper excise invoice**.
* **Conclusion**: You **cannot use the excise duty as input duty** because the seller is not a registered excise dealer. The invoice you have received is not valid for claiming **Cenvat credit** on excise duty.
---
### **4. Summary & Action Points**
* **Non-Registered Dealer**: If the seller is not registered under **excise**, they should not be charging excise duty on the invoice. You should raise this issue with the seller, as this could potentially be **non-compliant** behavior.
* **Cenvat Credit**: Since the seller is not registered for excise, the excise duty paid by you cannot be used as **Cenvat credit**. The invoice does not comply with the requirement for passing on valid credit.
* **Recommendation**: You should ask the seller for clarification or request them to issue a **corrected invoice** (if applicable). If the seller cannot justify the excise charge, you may need to consider raising this issue with the **excise authorities**.
---
Would you like help drafting a letter to the seller or the excise department to resolve this issue?
It seems like you're dealing with a scenario where a **trader registered under service tax** has received an invoice that includes **excise duty**, but the **supplier is not registered under excise**. Let's break it down and address each part of your query.
---
### **1. Can a Service Tax Dealer Trade Exciseable Goods Without Excise Registration?**
* **Excise Duty on Goods**: Generally, any **manufacturer** or **dealer** involved in the sale of exciseable goods needs to be registered under **Excise Duty** if they are manufacturing or trading in exciseable goods. A **service tax dealer** (who is not registered for excise) cannot legally **collect excise duty** and pass on **Cenvat credit** unless they are also registered under **Excise**.
* **Can a Trader Sell Exciseable Goods Without Excise Registration?**:
Yes, a **trader** (who is buying and selling excisable goods but not manufacturing them) **does not need to be registered under Excise** for trading purposes. However, such a trader **cannot issue a cenvatable invoice** to their customer because they are not registered under excise.
* If the goods are being sold without **excise registration**, the dealer is essentially **acting as a non-registered dealer**. **Excise duty should not be charged on such goods** unless the seller is properly registered with the excise authorities.
---
### **2. Invoice Received with Excise Duty but Seller Not Registered with Excise**
You mentioned that the **seller** (who is not registered under excise) issued an invoice with **excise duty at 12.36%** on scrap, and also mentioned **"Cenvat credit earlier availed by us and reversed pursuant to Rule 3(5) of the Cenvat Credit Rules, 2004"**.
#### **Key Points to Address**:
* **Excise Duty Charged by Non-Registered Seller**:
* If the seller is **not registered under excise**, they **should not** be charging excise duty on the goods. If they are doing so, it's a **violation of excise law** because only **registered manufacturers** or **dealers** (registered under excise) can legally charge excise duty and pass on Cenvat credit.
* **Invoicing with Excise Duty**: A non-registered dealer cannot pass on excise duty through an invoice unless they are specifically authorized to do so by the excise authorities, which is usually not the case.
* **Cenvat Credit Reversal**:
* The seller has mentioned reversing Cenvat credit **pursuant to Rule 3(5)** of the **Cenvat Credit Rules, 2004**. Rule 3(5) refers to the situation where **capital goods or inputs** (on which Cenvat credit was availed) are **removed from the premises** for sale or otherwise. In such a case, the credit is required to be reversed.
* If the seller has already availed Cenvat credit on inputs (perhaps on scrap or materials used in manufacturing), and the goods are being sold, the **Cenvat credit** must be **reversed**. But this reversal would apply to a **registered excise dealer**, not a non-registered one.
---
### **3. Can You Use the Excise Duty as Input Duty?**
Since the seller is **not registered under excise**, **you (as the buyer)** will not be able to **claim Cenvat credit** on the excise duty paid. The **Cenvat credit mechanism** allows businesses to take credit for **excise duty** paid on inputs or capital goods used in manufacturing or business, but only if the seller is a **registered excise dealer** and issues a **proper excise invoice**.
* **Conclusion**: You **cannot use the excise duty as input duty** because the seller is not a registered excise dealer. The invoice you have received is not valid for claiming **Cenvat credit** on excise duty.
---
### **4. Summary & Action Points**
* **Non-Registered Dealer**: If the seller is not registered under **excise**, they should not be charging excise duty on the invoice. You should raise this issue with the seller, as this could potentially be **non-compliant** behavior.
* **Cenvat Credit**: Since the seller is not registered for excise, the excise duty paid by you cannot be used as **Cenvat credit**. The invoice does not comply with the requirement for passing on valid credit.
* **Recommendation**: You should ask the seller for clarification or request them to issue a **corrected invoice** (if applicable). If the seller cannot justify the excise charge, you may need to consider raising this issue with the **excise authorities**.
---
Would you like help drafting a letter to the seller or the excise department to resolve this issue?
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