Service Tax credit

[Yatin Vora]

We are setting up new factory. I would like to know that can we take the service tax credit available during setting up of the factory,when we start the production for removal of taxable goods,from our factory? In other word, can we use for payment of CEVAT ? 

[sanjay singh pawar]

Cenvat credit rules allows use of Cenvat credit of input services used for the manufacture of goods. There is bar in availment and utilization of cenvat credit for removal of taxable goods.

[Ramanujam Varadarajan]

Service tax paid on input services used for manufacture of goods is entitled for credit.  However, please note that there are restrictions in availment of credit on certain input services like input services used in CONSTRCTION SERVICE of new factory / office etc.

Once the input services is entitled as eligible for CENVAT credit, it can be adjusted either adjust service tax liablity arise out of output services or excise duty arise out of manufacture of goods.

 

 

Firstly, you have to take registration and then you can avail CENVAT credit of capital goods received for the capital goods received.

However, there are certain services which are availed during setting up of a factory and CENVAT credit of services related to setting up of Factory are not allowed. Please refer to the exclusion clause provided in CCR, 2004 as amended on 01.07.2012.

AI Summary

Cenvat credit: input service credits allowed for manufacture but excluded for new factory construction, usable against tax liabilities.
Input services used in the manufacture of goods are generally eligible for Cenvat credit and, once eligible, may be utilised against service tax or excise duties; registration is required for claiming credit on capital goods, but services related to construction or setting up of a new factory are excluded from Cenvat credit under the Cenvat Credit Rules, 2004 as amended.