Cenvat credit

[N Balachandran]

 

Dear Sir,

Under the Cenvat Credit Rules 2004, a service provider is entitled to claim the benefit of cenvat credits in respect of the excise duties paid on capital goods and the service tax   paid on    input services used for providing output service.  Where the usage is for  providing exempted service, the credits would not be admissible. Precisely for this reason the   service provider would be required to ensure proper usage of input services and avail credits on those input services used for  use of input services  for the provisions of output service excluding exempted services . 

My question is  When the service provider pay the service tax against the services which are common input services, How, the CENVAT credit to be claimed by the Service provider? what is basis for claiming CENVAT credit?.  N.Balachandran 

AI Summary

Guidance on CENVAT Credit: Allocating Common Input Services for Taxable vs. Exempted Services under Rule 6 (2) & 6 (3) A service provider inquired about claiming CENVAT credit under the Cenvat Credit Rules 2004, specifically when common input services are used for both taxable and exempted services. The query highlights the need for proper allocation of credits to avoid claiming on exempted services. Respondents advised reviewing previous discussions on the topic and referred to Rule 6 (2) and 6 (3) of the Cenvat Credit Rules, which provide guidance on apportioning duty amounts between exempted and taxable services. The discussion emphasized that credits should be restricted to the taxable portion of services.