Ed.Cess & SH Cess credit to be taken or not

[Ramakrishnan Seshadri]

Dear Sir,

We are the manufacturers of automobile parts. We used to purchase paints for our paint shop.

One of our supplier has supplied the materials in the month of March 2015 by charging Cess and SH.Cess in their invoices. We have not taken credit of the Cess and SH.Cess. Hence we have not made payment of this. Now the supplier is asking payment for the Ed.Cess and SH.Cess claimed in their invoices. They also informed that the invoices were raised from Duty paid Godown and they are removing the goods as such. Since the materials are pertaining to February 2015 stock they are charging Ed.Cess and SH.cess. Whether their method is correct. Shall we take credit or what to do.

What is the procedure.

Kindly experts give your views in this issue.

Thanks and Regards,

S.Ramakrishnan.

AI Summary

Education cess credit: utilisation permitted for inputs, capital goods and services received on or after March 1, 2015.
Education Cess and Secondary and Higher Education Cess charged up to 28 February 2015 may be recorded as cenvat credit but their utilisation is limited by exemption notifications. Board clarifications permit utilisation of such cesses for payment of basic excise duty only where inputs, input services or capital goods on which the cesses were paid are received in the factory on or after 1 March 2015, with a transitional allowance for a portion of capital goods cesses; opening or earlier balances are generally not utilisable and require administrative guidance and disclosure.