Dear Sir/Madam
We are a limited company and providing works contract services for construction of Industrial plant for our client.
We are charging 4.944%(i.e.40% of gross work) on works contract service and depositing with service tax authorities.
Please clearify whether our client can avail cenvat credit for the service tax paid by him to us against payment of excise duty on his final procuct.
thanking you
Dear Vinay,
Unfortunately, your client would not be able to claim Cenvat credit. As per Rule 2(l) of the Cenvat Credit Rules, 2004, the cenvat credit for 'renting of motor vehicle' can only be claimed if the motor vehicle is a capital goods i.e., vehicles like, JCBs, etc., since, the definition of Capital goods is very restricitive in nature.
If your vehicle is of that nature, then your client may be able to claim. Refer to Rule 2(a) of Cenvat Credit Rules, 2004 for the definition of 'Capital goods'.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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