New Input Service Distribution Mechanism

[Rahul Mandal]

We have one of our factory located in Jammu & Kashmir (Non Taxable Territory) operating under an excise notification No. 56/2002 with other factories located in Taxable Territory.

The finished goods manufactured at these factories are stock transferred to several depots spread across the country (Taxable territory) wherefrom these goods are sold. These Depots including Headoffice are registered under Service Tax as Input Service Distributor. There are certain common input services which are purchased by Depots / HO,  pertains to all the factories including Jammu Factory. Example of common services are Advertising of products which are manufactured by all the factories including Jammu factory.

My queries are as below:-

1. Whethe we are allowed to avail the cenvat credit of Input Services attributable to Jammu Factory (Non Taxable Territory)

2. If yes, whether the input servcies attributable to Jammu factory can be allocated to other factories located in taxable territory on prorata basis (Turnover Ratio).

AI Summary

Can Input Service Credit from Jammu Factory Be Distributed to Other Factories? CENVAT Rules 5, 7, 7A Explained A discussion on a forum addresses the distribution of input service credit for a factory in Jammu & Kashmir, a non-taxable territory, under excise notification No. 56/2002. The main queries involve whether CENVAT credit for input services attributable to the Jammu factory can be availed and distributed to other factories in taxable territories. Responses indicate that input services can be distributed if duty is paid under the notification, and credit can be availed and distributed according to turnover ratios. Compliance with Cenvat Credit Rules, including Rules 5, 7, and 7A, is necessary.