Service Tax Credit on development of Logo on Stationery

[Ashok Chopra]

Respected Forum,

We are group of companies and develped common LOGO as design and artwork to be printed on Letter Heads, Envelops, Visiting Cards.  Bill has been received in EOU company.  Pls clarify

1.  Can we take credit of full amount of service tax in EOU Company and file refund under rule 5 of  CCR, 2004 or not ?

2  if the credit is permissible, whether proportionately?

pls advice

ashok chopra

[YAGAY andSUN]

As per the para 6.11 C (iv) of the FTP 2009-2014, "In addition, EOU/EHTP/STP/BTP shall be entitled to following:-

i) ...................

ii) ...................

iii) ..................

iv) CENVAT Credit on service tax paid.

Since, the Logo so created, will be used by you in allover the group companies, therefore, Department may raise objection that it is not being used entirely for EOU, Hence, cannot be treated as 100% accumation due to export from EOU.

A Conscious view needs to be taken in this matter after conducting the cost benefit analysis.  Proportionate allowance will not stand in this matter, as, there is no such provision in the Cenvat Credit Rule, 2004.

AI Summary

Service tax credit eligibility may be challenged when a logo developed in an EOU is used across the group. Eligibility for an EOU to claim CENVAT Credit on service tax paid for developing a logo is premised on EOUs being entitled to CENVAT credit, but where the logo is used group wide the department may object that it was not used exclusively for the EOU's export activity; the rules do not expressly allow proportionate allowance, so a cost-benefit assessment is advisable.