CENVAT Credit on Spare Parts used for Repairs

[Abhijit Dongaonkar]

Service Provider, who is having authroised Service station for car manufactuers. He is engaged into the business of  Sales of spares & Servicing of Vehicles in his service station. During the cource of Service of Vehicle/ Repairs of vehciles he also sales/uses  spares parts purchased from manufactuer. Service Provider invocie for Spares and Service charges separately to his customer. Now I have following queries:

 

1. Since the spares purchased are used in Services/Repairs of the vehicle, whether he will be able to take credit of Excise Duty paid on spare parts purchased by him from manufactuers ?

2. Now, the Trading is forming part of negative list, whether in this condition he would be to take proportinate credit of Excise duty paid on sapres purchased?

Please advice on above issue.

AI Summary

Cenvat credit eligibility depends on whether spare parts are used in taxable service or in exempted trading, affecting credit claims.
Cenvat credit on spare parts for a service station depends on activity character and attribution: inputs used for exempted services (including trading treated as an exempted service) are barred from credit under Rule 6, whereas credit for capital goods and input services is available if those items meet the statutory definitions and are used in taxable activity; separate invoicing and whether the transaction is a works contract affect eligibility.