Cenvat credit (cvd on customs) against service tax liability

Dear Experts,

We are restaurant service providers. We import products like fish, prawns & pay customs for the same. 

My question is that can we avail the CVD portion of customs duty as cenvat credit & set off against service tax liability??

 

Replies (1)

At time of import the following duties are levied:-

Basic Custom Duty(BCD)

Counterveiling Duty(CVD) u/s 3(1) of Custom Tariff Act1

Special Additional Duty(SAD) @ 4% u/s 3(5) of Custom Tariff Act2

1CVD is levied equivalent to the excise duty. This duty is leviable on Value of goods and BCD payable.

2SAD is levied equivalent to the VAT. This duty is leviable on Value of goods, BCD, CVD u/s 3(1) of Custom Tariff Act, Education Cess on BCD and SHEC on BCD.

Buyer will be eligible to take credit of CVD u/s 3(1) of Custom Tariff Act and Special Additional Duty (SAD) @ 4% u/s 3(5) of Custom Tariff. CENVAT Credit of Special Additional Duty (SAD) @ 4% u/s 3(5) of Custom Tariff in respect of capital goods can be taken at 100% in the financial year in which Capital goods are received.

 

A provider of output service shall not be eligible to take credit of Special Additional Duty (SAD) @ 4% u/s 3(5) of Custom Tariff.

 

In short, credit of SAD can be utilized for payment of excise duty but not for paying service tax.

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