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

Input credit restriction: opting for the exemption notification bars CENVAT credit on inputs and input services. Opting for the benefit of the exemption notification removes the entitlement to claim CENVAT credit of inputs and input services for the exempted activity; therefore selection of Notification 1/2011 precludes claiming input and input-service credit for the specified item.