Cenvat Credit on service Tax

[Dhanasekar Amaresan]

we are a manufacturer of Rubber products and also Equipment spares due to excemption we are not registered in Central excise dept. but we are purchasing dutiable material for input purposes. We are a service provider and paying service tax. My query is : Can we eligible to claim cenvat credit for adjust of Service Tax and we have import duty also.

[CA Rachit Agarwal]

For claiming the Cenvat Credit, you have to maintain separate accounts for receipt, consumption of the inventory used for exempted goods and dutiable services (Output Service).

If not then he can follow any of the 2 options

 1. Pay Excise Duty on entire exempted goods @ 5%.

2. Pay an equivalent amount of Cenvat Credit attributable to the exempted goods.

Refer Rule 6, of the Cenvat Credit Rules, 2004

[Brijesh Verma]

since you are providing taxable services and also manufacturing exempt goods, so you will fall under Rule 6(3) of the CCR'04.

AI Summary

Cenvat credit eligibility for mixed manufacturers and service providers: separate accounting or equivalent adjustment required under rule compliance.
Manufacturer-providers of taxable services who also produce exempted goods must maintain separate accounts for inventory receipt and consumption attributable to exempted goods and dutiable outputs; absent such segregation they must either pay excise duty on exempted goods or remit an amount equivalent to the Cenvat credit attributable to those exempted goods, pursuant to Rule 6(3) of the Cenvat Credit Rules.