EXCISE DUTY CREDIT

[SHARMA NARAYAN]

Dear All,

we have given a turnkey Projects to supplier can we are taking the Cenvat credit because we are the Consingee

but some cases he raised service tax bill with material value and service value for the fabrication irrection of structural material for setup Plant and machinery

Pls suggest can we take the cenvat credit on that bill on which he is issing the Servic tax bill

[Rajagopalan Ranganathan]

Sir,

Rule 2(l) (A) of Cenvat Credit Rules,2004 excludes "service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -

(a) construction or execution of works contract of a building or a civil structure or a part  thereof; or

(b) laying of foundation or making of structures for support of capital goods,

except for the provision of one or more of the specified services under Section 66E from the definition of 'input services'.

In view of the above if the contractor raises invoice showing separately the charges for goods supplied and for service provided you are not eligible for credit.

[Himansu Sekhar]

No not at all . this issue has been decided in judicial fora. The credit on the materials are not allowed because the service provider has taken the abatement. Credit not allowed means not allowed to any body.

AI Summary

Cenvat credit eligibility denied when works contract invoices separate goods and service charges, and abatement is claimed. Rule 2(l)(A) excludes the service portion of works contracts and construction services from 'input services' when used for construction, execution of a building or civil structure, or for laying foundations or support structures for capital goods; consequently, if a contractor's invoice separately states goods and service charges for such works, the recipient is not eligible to claim Cenvat credit on the service portion. Additionally, where the service provider has claimed an abatement, credit on the materials supplied in that transaction is not allowed.