service tax credit adjustment -reg

[Ramakrishnan Seshadri]

Dear Sir,

We are clearing as such removal goods to our vendor for manufacturing components of our finished products. We had a doubt. can we adjust the service tax credit available for this removal.

Please clarify with case laws

Thanks & Regards,

S.Ramakrishnan

AI Summary

Service Tax Credit Not Allowed for Goods Sent to Vendor Under Rule 2(p), Cenvat Credit Rules, 2004 A participant inquired about the possibility of adjusting service tax credit for goods removed to a vendor for manufacturing components. The response clarified that according to Rule 2(p) of the Cenvat Credit Rules, 2004, 'output service' excludes services where the entire service tax is paid by the recipient. Therefore, if the service tax is paid under Reverse Charge Mechanism (RCM) as consignor, it is not considered an output service, and credit cannot be taken for service tax paid on the removal of inputs to the vendor.