CENVAT CREDIT ADJUSTMENT

[PARVEEN ARORA]

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.

AI Summary

Cenvat credit eligibility clarified: excise duty on coating material may be credited while service tax on labour remains payable.
Where the supplier issues separate invoices for sale of powder (with excise duty) and for labour (with service tax), the excise duty paid on the coating material is admissible as Cenvat credit and may be adjusted against excise duty on the material billed separately; service tax on the labour component remains leviable and must be discharged in cash or by utilising available input or input-service credits. The Mega Exemption is limited to specified processes for parts of cycles or sewing machines and does not apply generally.