TaxTMI 
TaxTMI 
Can the credit of SAD (special additional duty) be utilized for payment of central excise duty or service tax by a manufacturer or service provider? If not, what are the barring provisions? Please reply soon.
utilization of SAD credit
12 Jul 2011 
9 Replies 
21716 Views Asked by
SAD credit availability: manufacturers can claim it, but service providers are precluded under CENVAT rules.
Credit of the Special Additional Duty under Section 3(5) of the Customs Tariff Act is available to manufacturers or producers of final products under the CENVAT Credit Rules, while service providers are expressly precluded from taking such credit by provisional restrictions in Rule 3 and related provisions; the practical rationale is that SAD compensates for local taxes on goods, which do not apply to services. (AI Summary)
Credit of the Special Additional Duty under Section 3(5) of the Customs Tariff Act is available to manufacturers or producers of final products under the CENVAT Credit Rules, while service providers are expressly precluded from taking such credit by provisional restrictions in Rule 3 and related provisions; the practical rationale is that SAD compensates for local taxes on goods, which do not apply to services. (AI Summary)