Correlation of input tax crdit with output

[chaganti srinivas]

We are basically mafr's of Pre fab Building and taking Service tax credit of Sercurity services, Man power, Banking charges, telephone charges etc and paying some times against Erection & Commission of our material and some times tranfering to Excise credit. Is is necessary to Co-relate the input service tax credit with output services and Can't we avail the said service tax credits?. Pleaes clarify.

[Nitin Bhisikar]

Dear Chaganti, If you see the Cenvat Credit Rules, 2004 defination of input service is illustrative in nature by using the word "such as". Therefore, it is not necessary to corelate the input service tax credit with output services. With reference to your second query, there is no bar for taking cenvat credit on these services if all document exist and other requirement of Cenvat Credit Rules, fullfilled. Further for taking Cenvat Credit of Excise Duty on material like cement, TMT bar, angle, channal etc. for making building, it has been restricted by the recent amendment in CCR, 2004 by notification no. 16/2009 CE (NT) dated 07.07.2009. Therefore, from 07.07.2009 cenvat credit Excise Duty is not permissable on these material.

AI Summary

Input service tax credit not required to be correlated with output services; entitlement hinges on documentary compliance.
The Cenvat Credit Rules define input service illustratively, so input service tax credit need not be correlated with specific output services; credit may be availed provided documentary and other Rule requirements are satisfied. However, cenvat credit of excise duty on building materials such as cement, TMT bar, angle and channel has been restricted by amendment and is not permissible from the amendment's effective date.