Input Credit of Goods and service tax eligible for Notification 1/2011

[MUNIRAJ SRINIVASAN]

Dear Sir,

I hereby request you to solve following problem:

My client has availing input credit of service tax as well as goods,  but he activities are as

1.  sale of Backery goods is availing exemption notification 1/2011  and

2. paying excise duty  on full rate @ 12% whether is eligible to take input credit ?

Department has refusing inputcredit benefits for item no.2 kindly inform us legal provisions

[Arti Gupta]

1. If you opt to pay excise duty under Notf no .01/2011 than you will not be able to take CENVAT Credit of input/input services.

AI Summary

Bakery Goods Seller Denied CENVAT Credit on Inputs Due to Exemption Under Notification 1/2011; Excise Duty Paid. A user inquired about the eligibility of input credit for service tax and goods under Notification 1/2011. The client is involved in selling bakery goods, which are exempt under this notification, and is also paying a 12% excise duty. The department has denied input credit benefits for the excise duty. The response clarified that if excise duty is paid under Notification 1/2011, the client cannot avail CENVAT Credit for inputs or input services.