Accounting of cenvet credit

During the Financial Year 2008-09 we have taken Cenvet Credit of 22,14,300.00 which has been adjusted from payable service Tax and paid the balance amount.

Due to an error, entries for Cenvet Credit transfer to Service Tax Payable Accounts has not been passed on monthly basis during the Financial Year and the same has been passed in next financial year 2009-10.

- This means the service tax content which was accumulated in 2008-09, was claimed as expenses in 2008, hence it can not be claimed in future years as it will lead "unjust enrichment"

- if the balance sheet has shown provisions of such input credit reserved, then you had to submit your statements on finalization of accounts to R/O, stating that the credits has to be utilized in future. 

- if any value based exemption has been availed by yourself during the accumulation period for service tax / excise , then such input credit is inadmissible.

Does the Service Tax Assessing officer has athoritiy to raise a demand for claim of Interest on Cenvet Credit claimed by us as the payment of payable service tax has not been made on due date each month.

We have already paid the interest on delayed payment of service tax on net payable amount i.e. Gross Service Tax Liability Less Cenvet Credit = Net Service Tax.

Kindly advise me on this issue.

Mohan Saxena

 
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