Clarification regarding rule 4(7) of Cenvat Credit Rule,2004

Dear Experts,

As per Rule 4(7) of Cenvat Credit  Rules , 2004 Service tax credit can be avalied only after payment of value of input service and the service tax payable on it.

Now Query is : -

Company A procures raw material from Company C and sends the  material for Job Work to Company B (Job Worker),  Due to some business requirements Company A asks Company C to deliver the material Directly to Company B (to the Job worker). 

After the above transction,  Company B (the Job worker) raises bill for job work charges.  And Company A while making payment to the Company B (job worker ) pays 50 % in CASH and Balance 50 %,  it adjusts against the material directly supplied by Company C.   Whether this book adjustment (payment by way of book adjustment) will amount to payment made as per Rule 4 (7).

If yes, some body can please through light on this issue. supported by some judgements  etc.

 

Regards

Sameer

 

 

 

 

Replies (2)

And In case Company A has to recover some amount from Company B (the Job Worker), and while making payment to Company B (Job Worker) the Company A, adjusts the amount recoverable from Company B (Job Worker),  Whether this transaction will amount to payment of value of input service & service tax in the light of Rule 4 (7).

Whether Company A is eligible to take credit in such case. ?

 

can anybody please reply to my query !

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