cenvat credit taken for service tax payment

[Dnyaneshwar Sapkal]

hello sir,

we are small scale manufacturer of weighbridge our turnover is below 1.5 cr

we are not registered under excise registration but we are registered under service tax act.

for manufacturing process we purchased raw material of steel and paid excise (cenvat) at the time of purchase

when our final product is completed we installed that at the place of costomer

our bill is raised separately as a sales invoice for weighbridge and another invoice for installation service bill.

when we paid service tax we are taken excise input credit (cenvat credit) at the time of payment of service tax payment. is it correct..?

please advice us...

thanks..

d.a.sapkal

[Rajagopalan Ranganathan]

Sir,

What is your turnover during previous financial year in respect of services provided by you. If it is within the limit of ₹ 10 lakhs in a financial year then you need not pay service tax.

Since you are availing exemption from payment of excise duty on the ground that your turnover does not exceed 1.5 Crore limit in a financial year you cannot avail cenvat credit of duty paid on inputs, capital goods and input services utilized by you in the manufacture of weigh bridge. Therefore the question of utilizing such crfedit for payment of service tax does not arise.

[SHIVKUMAR SHARMA]

Please Provide The Period of Your transaction.

[KASTURI SETHI]

Incorrect approach. Agree with Sh.Ranganathan, Sir.

[DR.MARIAPPAN GOVINDARAJAN]

I also endorse the views of Sri Rajagopalan

[PAWAN KUMAR]

Incorrect. Your primary activity of business is manufacturing which you are claiming ssi exemption under excise. The inputs, input services and capital goods utilized in such manufacturing is not claimable as cenvat credit under excise law. Your secondary activity is installation of weighbridge at customer premises. The inputs used in manufacturing of weighbridge is not admissible to you and thus you cannot take and utilize the cenvat against your output liability under service tax. The answer given by sh rangathan sir is correct.

[KASTURI SETHI]

During September, 2004 Cenvat Credit across the board was allowed i.e. Credit of Service Tax paid on input service was allowed in Central Excise and CE duty paid on excisable goods(inputs) was allowed in Service Tax sector. So "Across the board" was applicable only if you were registered with Central Excise and Service Tax both.

AI Summary

Cenvat credit entitlement excluded where small scale excise exemption applies, preventing use of input duty credit against service tax liability. A manufacturer claiming small scale excise exemption cannot claim or utilize cenvat credit of duties paid on inputs, input services, or capital goods used in manufacture to discharge a separate service tax liability; cross utilisation required contemporaneous registration in both excise and service tax and depends on period specific rules.