CENVAT credit can take as set off aginest ST Payable.

Dear sir,

Basically we are the manufacturer of Liquor. we are doing liquor manufacturing at our distillery. Ours is Registered Partnership firm.

We have our own brands production and also taken tieup with some 3 companies and we are doing bottling process for their products. But all sales and puchases will be generated in the name of our company only. We are selling the liquor (Finished Product) to Karnataka State Bewerages corporation.

We are liable to pay service Tax on the following situations:

1) We are charging Bottling service charges through debit note on monthly basis with serivce tax @ 10.30% to our tieup companies. After submitting the debit note they (tie-up companies) will reimburse the same after deducting TDS @ 2%.. In this case we are collecting service Tax on bottling services provided to our tie up companies and the same will be payable.

2) In another case we are liable to payable service Tax on GTA (Freight inwards and outwards). Service Tax on GTA will be 25% of the freight value X 10.30%. In this case we are not collecting any service tax on Transporter and we are liable to pay service tax.

Finaly we are payable service tax on the above said cases.

Against the above service Tax payable we are taking the following SET OFFs for service tax.

1) On Telephone Bills Payable.

2) Labour services contract payments

3) Security services payable.

4) Insurance Charges

5) Credit card payments.

6) Repairs and maintenances. Etc.,

And we are purchasing Raw materials and packing materials to manufacturing of liquor from with in state and interstate. On those purchases we will pay CENVAT @ 10.30% also.

OUR MAIN QUESTION IS CAN WE TAKE SET OFF THIS CENVAT PAID ON PURCHASES AGAINEST SERVICE TAX PAYABLE.

FOR EXAMPLE FIND THE SERVICE TAX PAYABLE STATEMENT OF OUR COMPANY.

1)	Service Tax payable Statement

	S.No	Details Service Tax payable for 1st Qtr	Payble	Set off
	1	Service Tax collecting on Bottling works done for Tie-up companies	500,000.00
	2	Service Tax payable on GTA Services (Freight Inward)	40,000.00
	3	Service Tax payable on GTA Services (Freight Outwards)	50,000.00
	4	Set off on the following Cases
		1) On Telephone Bills Payable.		5000
		2) Labour services contract payments		25000
		3) Security services payable.		10000
		4) Insurance Charges		40000
		5) Credit card payments.		2000
		6) Repairs and maintenances. Etc.,		5000
		Total amounts	590,000.00	87,000.00
		Net Service Tax Payable amount ( Payable - Setoff)	503,000.00


2)	CENVAT (Excise Duty) Paid on Purhcases for the 1st Qtr is Rs.		450,000.00

In the above situation we need to pay service Tax Rs. 5,03,000/-. Our main question Is can we take set off of the above CENVAT paid on purchases of Rs. 4,50,000/- against service Tax payable. If it is possible then we are liable to pay service Tax Rs. 53,000./- only.

Please clarify CAN WE TAKE SET OFF OF CEN VAT PAID AGAINEST SERVICE TAX PAYABLE. IF NOT PLEASE MENTION THE REASONS.

Cenvat Credit Rules 2004 which is common to both assessees under Central Excise as well as Service Tax. A service provider not only gets credit for the service tax paid on input services but even for Central Excise duties on raw materials and capital goods used for providing the taxable service On the Question of few services, the cenvat credit rules have been revamped from 1st April 2011, there are few exlusion like Goods having no relationship with whatsoever with the manufacture of final product and Goods used primarily for personal use or consumption of any employee including food articles etc, hence I would say Labour contract and Repair and Maintance credit will be avalable, however the other services it is doubtful.