Dear Sirs,
Kindly clarify the Service Tax in Manufacturing Company 1)Freight Charges for material Inward 2) Freight Charges for Finished Goods Outward to Buyer 3) Freight Charges recovery from Buyer.
Whether which one is Cenvat Input Credit allowed? Under Recharge Mechanism can avail Cenvat Credit? or Can avail Credit on Cetral Excise? We are registered Only GTA by Road under Service Tax Act.
Freight is freight does not matter whether Inward or Outword Reverse Charge is applicable on it if one consignment than the limit is Rs 1500 or if the muli consignment in one truck than the limit was Rs 750
If the amt is exceeding the limit than the Reverse Charge applicable .
Dear Mr. Manoharan,
As per Rule 2(l) of Cenvat Credit Rules, Inward transportation of Inputs or Capital Goods and Outward transportation up to the place of removal can be availed as input credit.
In your case,
1) Freight charges for material inward can be availed as Cenvat Credit.
2) With regard to Freight charges outward, please refer to the below definition of Place of removal - Hence, in your case, the cenvat credit of outward transport is available ONLY UPTO the PLACE OF REMOVAL. If none of the below satisfies in your case, then Input Credit cannot be availed.
3) If the Freight charges are recovered from the buyer, then effectively, you are not paying them and hence, Input Credit is not available to you.
As per Rule 2(qa) of the CENVAT Credit Rules, "place of removal" means—
| (i) | a factory or any other place or premises of production or manufacture of the excisable goods; | |
| (ii) | a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty; | |
| (iii) | a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory, |
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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