2.
Sir,
The first proviso to rule 4 (7) of Cenvat Credit rules 2004 stipulates that -
""Provided further that in case the payment of the value of input service and the service tax paid or payable as indicated in the invoice, bill or, as the case may be, challan referred to in rule 9 is not made within three months of the date of the invoice, bill or, as the case may be, challan, the manufacturer or the service provider who has taken credit on such input service, shall pay an amount equal to the CENVAT credit availed on such input service, except an amount equal to the CENVAT credit of the tax that is paid by the manufacturer or the service provider as recipient of service, and in case the said payment is made, the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules.
In your case you take the credit on the basis of your consultant's bill immediately after receipt of the same. Then you reverse the same since you are paying the bill amount within three months from the date of the bill. Then when pay the bill you take the credit again. a possibility that audit objection will be raised against you on the ground that you have taken the credit beyond one year from the date of the bill. The last sentence of the proviso stipulates that "subject to the other provisions of these rules". This provision will act as villain against you since the third proviso of rule 4 (1) stipulates that "the manufacturer or the provider of output service shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub- rule (1) of rule 9". However in my view you case is arguable one.