Availability of service tax input credit

[sunil mehta]

A service provider of Tangible Goods Supply services gives mining machinery on rental basis.He has claimed cenvat credit of capital goods on machine.Service provider has to bear thecost of diesel/petrol used as fuel in the machinery given on rent.He also uses oil/grease for that machine. Query:-1)Whether cenvat credit on inputs-diesel/petrol is available? 1b)whether cenvat credit on oil/grease is available as 'input' credit? 1c)Whether cenvat credit of excise duty paid on spares/machinery parts used in that machine is available as 'input' credit? 2)Will it make any difference if service provider instead of giving mining machinery on hire,he himself provides 'mining services'(i.e. excavating and cutting limestone in a Quary & unloading same in cement factory )?In other words whether above 'input credit ' will be available to him?

[Rama Krishana]

(1) Assuming he is paying service tax on renting of machinery - No cenvat credit is allowed on petrol or diesel. Oil and grease are allowable inputs for the purpose of cenvat credit. (2) the situation would remain same if he is providing services under different category. The conditions of availing cenvat credit are uniform and not subject to classification of a taxable service.

AI Summary

Cenvat credit: fuels excluded while oil and grease qualify as inputs, unchanged by service classification. For a service provider charging service tax on machinery rental, cenvat credit on petrol and diesel used as fuel in the rented machinery is not available, whereas oil and grease consumed in the machinery qualify as inputs and are allowable; these eligibility conditions remain unchanged if the provider instead supplies mining services directly, since cenvat credit conditions are uniform and not dependent on service classification.