Cenvat credit on works contract.

[MAYUR BHIRUD]

Dear experts,

We are manufacturer of chemical and executes a works contract for modernization of factory buildings( like painting, plastering). We already paid service tax under reverse charge mechanism. Can we take cenvat credit on service tax paid on works contract services.

Please give your valuable advice.

[Ganeshan Kalyani]

Sir, In my view you cannot take the credit. Thanks.

[JSW CEMENTLIMITED]

Sir

From your query it appears that the service falls in the caregory of repair and maintenance of factory building. In my view service tax credit can be availed. Hopefully service tax has been paid on 70% value of service

[YAGAY andSUN]

In the definition of Input Service, the word/phrase modernization of factory is specifically included. Hence, in our view painting, plastering is nothing else but repair of factory premises, CENVAT credit shall be allowed.

[KASTURI SETHI]

I endorse the views of M/s. JSW Cement Ltd. and M/s.Yagay and Sun, Sirs. Under RCM the assessee has to pay ST in cash and thereafter to take the credit.