Utilization of Cenvat for the month.

[Guest]

Dear Sir,

I am making payment for the month of Jan 15, and I have some bills dated Mar 15, Can I use that cenvat for the month of Jan 15 as we have already late and reason in correct that when we are making payment in the month of Oct 15 for Jan 15 and march bills are already in hand.so Can I utilized cenvat against liability for the month of Jan 15.

[PARMAR CHETANKUMAR]

Hi Sarfraz,

You can not avail & utilise credit of the March-15 against payment for the month of Jan-15. You can only utilise the available balance of Cenvat for the current month or for the any previous month, if any.

[Rajagopalan Ranganathan]

Sir,

First proviso to rule 3 (4) of Cenvat Credit Rules, 2004 states that-

" Provided that while paying duty of excise or service tax, as the case may be, the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be.

Therefore you cannot utilize the credit earned in March 2015 for paying duty for the month of January 2015 though you pay the same along with interest and penalty under Sub-rules (3) and (3A) of rule 8 of Central Excise rules, 2002.

You can utilize the credit earned during the months prior to January 2015 and available in your credit account for discharging the duty for the month of January 2015. You have to pay penalty and interest only in cash

[Guest]

Dear Sir,

Thanks for your reply, In such case, what would be solution for excess Interest paid towards Service Tax.

* Can I Adjust excess Interest of Transportation against clearing as the Asessee code is same.

or what would be the best solution for this excess payment of Interest.

[Ganeshan Kalyani]

In my view interest paid cannot be adjusted against payment of tax whether paid equal or excess.

[Rajagopalan Ranganathan]

Sir,

As per sub-rule 4A of rule 6 of Service Tax Rules, 1994,-

"Notwithstanding anything contained in sub-rule (4), where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be.

Therefore excess amount paid paid towards service tax can be adjusted against service tax payable for the next half-year only. If you have paid interest in excess you can only claim refund of the excess payment. Since 'interest' is not duty the excess interest paid can be claimed through a simple letter addressed to the jurisdictional central excise officer who is authorised to grant refunds.

[DR.MARIAPPAN GOVINDARAJAN]

The views of Rajagopalan Sir is very much correct.

[Guest]

Thanks for your reply sir,

How do I show excess Interest paid in ST3. so that I can claim it for refund.

Also note : my actual question was " I have two services under one assesee code, called transport and clearing, I have made excess Interest payment for Transport and Still I have to make payment for Interest on clearing under same assesee code, can I adjust that excess interest in transport division with Interest only with clearing division.

here I am not ajdusting liablity against interest payment only interest payment with interest of another division under same assesee code.

[Rajagopalan Ranganathan]

Sir,

I agree with your logic. But logic cannot or replace provisions of law. If you have paid excess interest in respect of transportation you have claim refund of the same. You have to pay interest in respect of clearing service afresh, e correctly. Law will not accept adjustment of excess interest paid in respect of one service against interest payable against another service. Moreover accounting code for payment of interest is different for transportation service and clearing service. Accounting code for payment of interest in respect of clearing and forwarding service is 00440046. Accounting code for payment of interest in respect of transport of goods by road /GTA service is 00440263. since the accounting code is different you cannot adjust excess interest paid in respect one service against interest payable in respect of other service.

[Rajagopalan Ranganathan]

Sir,

Please omit the word 'or' in the first sentence of my reply dated 15.10.2015. It is typographical error. The same is regretted.

[Guest]

That;s fine sir, Can you please tell me how do I show excess Interest paid in ST3 so I can claim for refund.

Thanks a lot for your help sir.

[Rajagopalan Ranganathan]

Sir,

You show the exact interest (including excess interest) in the column provided for indicating payment of interest. However you can indicate in the remarks column (at the end of the return) that you have to pay interest so much amount but you have paid excess interest and difference between the interest payable and interest paid will be claimed as refund. Interest is not duty and hence limitation provided under Section 11B of Central Excise Act, 1944 as made applicable to Finance Act 1994 is applicable to claim refund of excess interest paid.

AI Summary

Cenvat credit utilization: only credit available at month-end can discharge that month's liabilities, later credits cannot. Cenvat credit can only be utilized to the extent such credit is available on the last day of the relevant month or quarter; credits arising later cannot discharge earlier month liabilities. Interest and penalty must be paid in cash. Excess service tax payments may be adjusted against the succeeding period, but excess interest must be claimed as a refund from the jurisdictional officer. Excess interest for one service cannot be adjusted against interest for another service under the same assessee code due to different accounting codes. Disclose actual interest paid in ST-3 and note the refund claim in remarks.