Payment of service tax through cenvat or PLA

[Guest]

We are a manufacturing unit and have surplus of CENVAT credit for more than Rs. 1 cr. this credit has been accumulated on Capital Goods and Raw material as we are in exports also. Now we have provided consultancy service to a unit and we have charged Service Tax of Rs.5 lacs on invoice raised by us. Now question is whether the payable amount of Rs. 5 Lacs can be adjusted against CENVAT Credit available from Manf activities or we should deposit thru PLA.

[Surender Gupta]

Yes, where the manufacturing unit service providing units are same. There is no bar in using the available cenvat credit for making payment of service tax or central excise.

[Guest]

The view express by Mr. Dinesh Gupta appear to be correct. Inter use of cenvat credit is no bar. You can use cenvat credit availed for the purpose of central excise to pay service tax.

AI Summary

Manufacturers Can Use Surplus CENVAT Credit for Service Tax Payments, Confirm Experts; No Restriction on Inter-Use A manufacturing unit with a surplus CENVAT credit of over Rs. 1 crore, accumulated from capital goods and raw materials, inquired whether it could use this credit to pay a Rs. 5 lakh service tax charged for consultancy services provided. Two respondents confirmed that there is no restriction on using CENVAT credit from manufacturing activities to pay service tax, as long as the manufacturing and service-providing units are the same. This inter-use of CENVAT credit for service tax or central excise payments is permissible.