Sir our entity is doing powder coating on job work basis.
That the entity is issue two separate bills one for sale of powder (which is affixed on the principal item) & other one is for labour charges (charges due for affixing the powder on principal item).
That the entity is charging service tax on labour charges.
That the Entity purchases the powder for affixing of powder on principal item.
That the Purchases made from excise dealer & paid excise duty accordingly on purchase of powder.
Now my query is can the entity take the credit of excise duty paid on purchase of powder against his service tax liability.
CENVAT Credit Eligibility for Powder Coating: Admissible for Offset of Excise Duty, Service Tax Applicable to Labor Charges. An entity engaged in powder coating on a job work basis inquired about the eligibility to claim CENVAT credit for excise duty paid on powder purchases against its service tax liability. Opinions varied among forum participants. One response indicated ineligibility for credit, while another suggested eligibility from March 2016, referencing CENVAT Credit Rules 2004. It was noted that powder coating does not constitute manufacturing and is exempt from service tax under certain conditions. A detailed explanation clarified that CENVAT credit on powder coating materials is admissible and can offset excise duty, with service tax applicable to labor charges. (AI Summary)
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