Availability of Cenvat credit

[Apurba Biswas]

Our HO transfer all cenvat credit to Factory by a Debit note at the end of month as it has taken ISD registration.

Question : Can we claim credit on Rent or Electricity payment of HO in our ER /ST3 return?

[DR.MARIAPPAN GOVINDARAJAN]

In my view credit can be taken.

[Ganeshan Kalyani]

If it has nexus with the output service or in the manufacturing of final goods .

[KASTURI SETHI]

I support the views of both experts and further I want to ask why you do you resort to Debit Note and why not invoice ? No doubt there are case laws which allow cenvat credit on debit notes but it should not be a routine practice. Debit note not prescribed document under 9 of Cenvat Credit Rules, 2004.Debit note must be supported by an invoice, bill or challan as per Rule 9(g) of Cenvat Credit Rules, 2004.

[Mahir S]

On what basis do you think that such credit cannot be availed ?

[YAGAY andSUN]

On Invoice/Bill/Challan the CENVAT Credit can be distributed under ISD. However, there are few judgements which allowed Distribution on Debit Notes provided such Debit Notes do have all ingredients of an Invoice.

[Ganeshan Kalyani]

Also if the address on the face of the invoice is of the factory then by mere sending the bills to the factory, the factory would be able to take the credit.

[Ganeshan Kalyani]

Proper method to distribute the credit is through the mechanism of Input Service Distribution.

AI Summary

Cenvat credit entitlement: head office rent and electricity transferable to factory when nexus and compliant documentation exist. Cenvat credit for HO rent and electricity is claimable at the factory if there is nexus with output and proper distribution through the Input Service Distribution mechanism. Although invoices, bills or challans are prescribed, some decisions permit distribution on debit notes that contain all invoice ingredients; Rule 9(g) requires debit notes to be supported by an invoice/bill/challan. Proper documentation and the invoice address determine whether the factory can avail the credit, and routine reliance on unsupported debit notes is not recommended.