Unutilised Cenvat Credti

[Swapneswar muduli]

Dear Sir,

For one our unit we had taken Excise Registration for manufacture and service tax registration for payment of Service tax under reverse charge mechanism, after few years we had stopped the manufacture and started job work under notification-214/86 for our other units so we don't charge any service tax for said job work. During this period we availed few services like GTA, labor supplies and security and we paid service tax on that under RCM and take Cenvat credit also, At present we had stopped the job work and all the machinery we transferred to our other unit through sales invoice and paid the duty. Now we don't have any operating activity but we regularly filling the ER-1, ER-6 & ST-3 on time. We have a credit Balance in Cenvat Credit. Audit also pending from long time.

So my question is

1) Whether Input Service tax credit is illegible during the job work period as we are doing job work under 214/86.

2) What about our Credit Balance of Cenvat Credit whether we are illegible for Refund or not ?

3) Can we file for surrender of Registration certificate as our Audit is pending for a long period ?

4) Can we close this premises as our products which we are sales at the time of manufacture it is under warranty period up to the 2017.

Regards

Swapneswar

[Rajagopalan Ranganathan]

Sir,

The answers for your queries are as follows: -

Q.1: - Since you are clearing the job worked goods without payment of duty as per CENVAT Credit Rules, 2004 no credit of service tax paid on input service is available to you. But in certain cases the goods which emerge after job work may be treated as manufactured goods and the department may ask you to pay duty on such goods If it is the case you can avail the credit of duty paid on inputs, capital goods and service tax paid on input services. It depends on the facts of each case. Normal practice is the principal manufacturer who supplied the raw materials/inputs for job work will take the credit and utilize the same for payment of duty of final products of principal manufacturer.

Q.2: -Unutilized Cenvat credit can be refunded to you under rule 5 of Cenvat Credit Rules, 2004 only when you prove that the credit available is duty paid on inputs used in the manufacture of final products which are ultimately exported. Otherwise the same will lapse.

Q.3: - Pendancy of audit is not a bar for surrendering the Registration Certificate. It is for your Range Officer to take up the issue with Commissioner (Audit) to complete the audit at an early date on the ground that you have filed an application for surrendering the R.C.

Q.4: - Yes. You can close the premises. Warranty of your products is till 2017 cannot be ground for not closing your inactive unit.

[Ganeshan Kalyani]

Nicely explained by Mr. Rajagopalan sir. It enriched my knowledge. Thanks.

[Mahir S]

Sir,

The reply to your query is as under :-

1) Yes

2) Yes

3) Yes

4) Yes.