Entitlement for credit for input service tax paid

We are having a manufacturing unit set up in exemption zone ( Uttrakhand ), and have exercised an option not to charge central excise duty on our finished output ( under notification no. 50/2003. We are also not taking CENVAT on input material purchased.

Besides we are also providing services for design ( Business Auxiliary), and charging service tax in our invoices for the same. Can we take input credit of service tax paid by us on services availed such as Security Charges, etc. or the same has to be divided proportionately.

Replies (2)

Rule 6 of cenvat credit rules 2004 will apply. U have to maintain seprate books. if not maintain than two options. One of them is monthly credit needs to be reversedc based on value. For example sale is made of Rs.1000 and service provided is of Rs.500. Total credit availed is of Rs.100. u need to reversed Rs.33.33 credit. Every month thismethod to follow. At the year end final duty calculate based on yearly figurs of sales and service

In addition to the above 3rd option is to pay upto 5% exempted services... i would suggest you either choose the 1st or 2nd option...

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