Proportionate calculation

[Guest]

Dear Friends, Please give your relevant inputs on this query : we are manufacturing of dutiable and exempted products, we are availing a service of labour contractor, which is used in the manufacture of final products. Labour contractor monthly basis charged the bill with service tax for Rs.112360/- (100000 + 12360 service tax). Now question of taking a service tax credit for the above bill. For taking service tax credit, we have apply the proportionate credit method like …i.e; We have collect the production data from our production department, like dutiable production qty 1,00,000 nos and Excisable production qty 50,000 nos, so the total nos of production is 1,50,000 nos (1,00,000+50,000). We are applied proportionate formula like 50,000 (Excisable production qty) * 12360 (Service tax credit) / 1,50,000 (Total production qty) =4120 eligible service tax credit IS IT CORRECT WAY TO TAKE THE SERVICE TAX CREDIT?

AI Summary

Proportionate Service Tax Credit Method for Labor Contractor Bills in Manufacturing Accepted by Authorities A user inquired about calculating service tax credit for a labor contractor's bill used in manufacturing both dutiable and exempted products. The bill included a service tax of Rs. 12,360. The user applied a proportionate credit method based on production quantities, calculating an eligible service tax credit of Rs. 4,120. A respondent confirmed that such a method is accepted by judicial authorities, emphasizing the importance of ensuring the method's correctness and acceptability.