Discharging of service tax liability against Cenvat credit

[Guest]

1. Can a mfg. co. discharge its service tax liability by debiting in Cenvat credit account ? Co. wants to avail 75 % abatement. Manoj

[Madhukar N Hiregange]

Availing the 75% deduction is possible as long as the declration of non availmentof credit / Not 12/2003 exists. It should be possible to utilise the cenvat credit for payment of the freight liability, however there maybe a question of how input services are used to pay for liability on input servcies. Practically we suggest to pay the same in cash and avail the credit immediately.

AI Summary

Cenvat credit use for service tax discharge allowed subject to declaration requirements and input service usage; consider cash payment first. A manufacturer may utilise Cenvat credit to discharge service tax liability provided the requisite declaration of non availment exists for claiming the 75% abatement; questions can arise about whether specific input services may be used to meet tax on those input services, and the practical suggestion is to pay cash and then avail credit immediately.