A company has 2 plants one producing electricity and the other excisable product. Also, the electricity produced is used in the other plant. I was wondering whether the company can take the credit of duties paid on services used in the electricity plant in the the other plant since electricity is exempt?
Cannot take service tax credit relating to elecrtricity plant since it is exempted. Even if you want to use the credit, then you have to reverse the credit based on the formula given under CCRule 6. It is a complicated process and is difficult to satisfy the excise department personnel that you are complying with under CCrule 6. Hence it is advisable not to take service tax credit. Just go through the CCR 6 and calculate the impact. Then take a call accordingly.
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