Service Tax on non dutiable items.

[Samik Chaudhuri]

Sir

I am in manufacturing co we have taken credit on input services such as GTA, Security & Works Contract. Till date we have not started the utilization of credit. But department asked me before utilization of Service Tax Credit we have to reverse the duty involved in making non dutiable items otherwise 6% duty will be applicable on credit utilized amount. We never take credit on GTA for input service related to non dutiable items but how can we segregate the Security & Works Contract for non dutiable items. Please advise me.

With thanks & regards

Samik Chaudhuri.

AI Summary

Manufacturing Firm Seeks Clarity on Service Tax Credit for Non-Dutiable Items; CENVAT Rules Highlighted on Credit Reversal A manufacturing company inquired about service tax credit on input services like GTA, Security, and Works Contract, specifically concerning non-dutiable items. The department advised that before utilizing service tax credit, the duty on non-dutiable items must be reversed, or a 6% duty will apply. The company sought advice on segregating credits for non-dutiable items. One response highlighted CENVAT credit rules, emphasizing the need to reverse credits if invoices aren't paid within three months and that credits can't be taken for exempted goods. Another suggested justifying credit usage or maintaining separate records for dutiable and exempted goods.