Service Tax input no avail if goods send for jobwork against Annexure Challan

[Asked by Guest]

Recently we had EA - 2000 of our company.

In that we had been raised with the Query Memo saying that if the goods are send to vendor outside for Job Work against Excise Annexure Challan Part I and II then no such credit input of service tax to be taken whichever been charged to us by the Vendor in their Invoice.

Kindly clarify us whether such notification is there from the Department in this regards.

Regards,

Hemal Panchal

HP ENGG LTD

[MUKUND THAKKAR]

sir,

your final product is covered under the payment of excise duty. than service tax is charged by your job worker.which has wrongly charging you service tax. on the bases of audit party is raised the objection for taking cenvat credit on service tax paid by your job worker .

[Rajagopalan Ranganathan]

Sir,

Serial No. 30 of Mega Exemption Notification No. 25/2012-ST dated 20.6.2012 (effective from 1.7.2012) exempts any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer. I hope you are paying excise duty on final product in which such job worked goods are used. Therefore your job worker need not pay service tax on the job work done by him. However since he had paid the service tax and the same is reimbursed by you you can avail the credit . The query memo issued by audit is not sustainable in law.

AI Summary

Cenvat credit availability: principal can claim input credit for service tax paid and reimbursed by job worker.
If the final product is liable to excise duty and the principal manufacturer bears that liability, the job worker's services are exempt and should not attract service tax; where service tax was nevertheless paid by the job worker and reimbursed by the principal, the principal may avail cenvat credit, and an audit objection denying such credit is not sustainable under the exemption framework.