Credit of R & D Cess for import of technology from foreign company

[Manoj Pant]

Experts,

I have one doubt regarding R & D Cess,

When we importing some technology from foreign company, we have to pay R & D Cess, and the same is exemption in service tax.

suppose the work value of 10 lakhs, When we are paying R & D Cess for import of technology and for such case the service tax payable calculated in such manner:

Gross Service tax at the rate of 12 percent on value of Rs. 10 Lakhs   120000/-

Less exemption for R & D Cess Paid                              50000/-

Net Service Tax                                                            70000/-

Add. EC & SHEC at the rate of 3 percent                                                 2100/-

Service tax payable                                                     72100/-

in that case how much CENVAT Credit we can avail. i.e. gross service tax payable(i.e. 12.36) or net service tax payable (7.21) after exemption of R & D Cess.

[YAGAY and SUN]

You can avail CENVAT credit on the Net Service Tax paid by you.

AI Summary

CENVAT credit entitlement available on net service tax paid after R & D cess exemption.
The operative clarification states that CENVAT credit can be availed only on the net service tax actually paid after accounting for the exemption attributable to the R & D cess; the exempted cess does not form part of the taxable service for credit purposes and credit should be limited to the net service tax liability remaining after that exemption.