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Cenvat credit

Narayanasamy.Y (Freelancer-Accounts&Tax) (92 Points)

10 October 2007

Dear Friends

Can any one tell me wats cenvat credit in brief, with example

Regards Narayanan-Chennai

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7 Replies

Ramasubbu K (Sr.GM - Finance & Company Secreta) (685 Points)
Replied 10 October 2007

CENVAT is a central value added tax. Cenvat credit means taking credit ofany excise duty, customs duty or service tax paid on the input of materials and services which are used for manufacture of excisable goods. The credit taken on such duty and tax shall be utilised by adjusting the same while the manufacturer pays the duty or tax on sale of excisable goods and output services.

ravi sankar (Chartered Accountant) (157 Points)
Replied 10 October 2007

Also recently I read that service tax on cell phone bill can be adusted as input credit in cenvat. Am I correct?

Ramasubbu K (Sr.GM - Finance & Company Secreta) (685 Points)
Replied 11 October 2007

If cell phone is in the name of the service provider, it can be adjusted as you said.

Narayanasamy.Y (Freelancer-Accounts&Tax) (92 Points)
Replied 11 October 2007

hi Many thanks to you Mr.Ramasubbu,Kindly tell me what are the basic compliances to be dealt with and important forms concerned in Central Excise. Regrds Narayanan-Chennai

Dayal (Gen. Manager - Indirect Taxation) (3431 Points)
Replied 18 October 2007

Yes, in t his matter you can refer the master circular No 97/2007: following is the clarification awarded with respect to your query In the Service Tax Credit Rules, 2002, it was prescribed that credit of service tax was admissible only on telephone connection installed in the business premises. A clarification to this effect was also issued vide circular No. 59/8/2003-ST, dated 20.6.2003, in the context of the Service Tax Credit Rules, 2002. However, in the CENVAT Credit Rules, 2004 no such condition has been prescribed. Therefore, w.e.f. 10.9.2004, credit of service tax paid in respect of mobile telephone service is admissible, provided the mobile phone is used for providing output service or used in or in relation to manufacture of finished goods.