Cenvat credit

If your finished goods is exempt then you could not claim the duty on exempt goods, further in service tax portion need to be analysis that you are also exempt in Service Tax or not. And also requested you to kindly examine the issue you fall under mega Exemption scheme or not ready very carefully Notification 25/2012.

Further if you having the queries please forward the same.

The principle of credit is linked to payment of output tax. Where the material value is not being taxed under Service tax then credit under ST is not available for inputs used.

If one is paying duty on actual service value or on 40% of gross then input credit would not be available.

However capital goods used to construct + input services used directly + those specified would be eligible for set off.

Condition 1.

I usaully issue 2 separate bills I for Material & other for installation service.

1) Sale of Solar Power Plant (with not tax)

Excise duty is charged on purchase of raw material for such sale.

2) Intallation of Solar power plant with civil work. ( Service tax is payable on this service)

I want to take credit of excise duty paid in purchase of raw material consumed for solar plant against servie tax payable for installation of the same solar plant. 

Whether in this condition Cenvat credit of Excise duty is available against service tax payable.

Condition 2:

Single Invoice raised under Works Contract scheme i.e. amount of material & service is not bifuracted. Excise is not charges as expempted good but service tax is charged.  

 Whether in this condition Cenvat credit of Excise duty is available against service tax payable.

( In both condition Service tax is payable on production of same product which is exempted form excise)

Please advice.

Mr. Rohit laad,

Your question is already answered.

reiteraterating, your not eligible to take cenvat credit on rawmaterials which are used for manufacturing of solar products because you are not paying any excise duty on your removals.

This is applicable in both the cases as mentioned by you above.

Furter, with regard to installation service, yes you avail credit on inputs and inputs services  but the condition is that you should have directly and exclusively used only for providing of output service on which you have paid taxes. 

With regard to capital goods, you can avail cenvat credit only when you have used those goods for providing taxable services and also for manufacturing of exempted goods.

Advise: Please take your list of capital goods, inputs, input services and seek your consultant to take decision in this regard.

Availement of ineligible credits would invite SCN from dept at later stage.