Cenvat for Service provider and Manufacturer

[Arti Gupta]

We are manufacturer as well as service provider and we are doing both the business from same premise. Accordingly, we are registered with Excise authority as manufacturer and Service tax department as Provider of output service. We have single books of accounts for both of business.

Please advice whether we have to maintain separate CENVAT accounts for manufacturer and Service provider or single CENVAT account for both?

[Rajagopalan Ranganathan]

Gentlemen,

As per sub-rule 9 of 2 of Rule of CENVAT Credit Rules,2004

Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for-

(a) the receipt, consumption and inventory of inputs used-

(i) in or in relation to the manufacture of exempted goods;

(ii) in or in relation to the manufacture of dutiable final products excluding exempted goods;

(iii) for the provision of exempted services;

(iv) for the provision of output services excluding exempted services.

If you do not clear any exempted goods and not provide any exempted service, then you can maintain common CENVAT Credit Account.

[YAGAY andSUN]

Dear Sir/Ma'am,

If you are not providing any exempted services or not producing exempted goods along with taxable services and dutiable goods, then, there is no need to maintain separate set of books of accounts.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Madhukar N Hiregange]

You may face some challenges in filing your ST-3/ ER-1 as to showing of your credit availment and utilisation. Maybe you need to let dept know in writing the method that you are availing the credits and utilizing. {proportion etc] Otherwise in my v9iew advisable to maintain separately as anyway return formats are different.

AI Summary

CENVAT account separation: maintain separate records when inputs serve both taxable and exempt goods or services. Cenvat Credit Rules require that when inputs or input services are used in relation to both dutiable and exempt goods or services, separate accounts must be maintained for inputs used in or in relation to manufacture of exempted goods, manufacture of dutiable final products excluding exempted goods, provision of exempted services, and provision of output services excluding exempted services. If no exempted goods are cleared and no exempted services are provided, a common CENVAT credit account may be maintained. Taxpayers should ensure proper reporting of credit availment and utilisation and may notify the department of their method.