Cenvat on subcontracting and Input Goods

Queries 901 views 3 replies

rahul

32 Points Joined November 2009

Dear Learned Members

I would like to have some Clarifications for the doubts regarding Cenvat and Subcontracting.

We provide the Cranes on rent for the erection and other purposes, and are registered in category of Supply Of Tangible Goods For Use Service.

The question is as follows:

1. Can we take the cenvat cenvat credit for the excise paid on Lubricants and the Spare Parts which are used for the running of these Equipments, as these goods are basic Input Goods for the Service to be provided.

2. If we Subcontract the total work of hiring to any other company and the other Company say "X-Company", so the service tax paid to the x company would be eleigible for the Cenvat Credit or not.

If yes then would it be eleigible for the Cenvat in the Same catageory of Service i.e. Supply Of Tangible Goods For Use Service. or we have to register in any other Cataegory of service. (Please kindly Consider the thought that the full contract has been Sub-contracted, instead of part of work has been sub contracted.)

Thanks and Anticipatly waiting for the response.

Rahul Goel

Replies (3)

CA Unnikrishnan Nair N

Chartered Accountant

2083 Points Joined February 2011

1. Lubricant is input and spares are capital goods. Both are eligible for cenvat credit.

2. Even when the whole work is subcontracted, your are holding the title to the service as long as you are raising bill on your customer. Hence you also have tax libility and by virtue of the direct nexus between the input and output service, cenvat credit is admissible.

nidhi goel

student

26 Points Joined April 2011

in case u r providing the service, u vl get the cenvat credit of both the lubricants as well as spare parts as lubricants are inputs as per sec.2(k) of CCR. and spares are capital goods as per sec 2(a) of CCR.but in case of spares u can tak 50% of total credit in 1st year.

https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=1307

u can go through the above link.

n sorry no idea abt ur 2nd query

hitesh

Telecom Industry

169 Points Joined January 2011

1. u can take the credit of excise paid on spares and lubricants..

2. for claiming credit, u dont have to get registered. only condition is that the cenvat credit availed should be directly used for the purpose of business, which is the in your case. thus u can claim the cenvat in second case also..