cenvet credit urgent query

[shruti gupta]

Hi,

The query is our company is into service industry. we are having two units, one of which is 100% EOU and the other one is typically into providing services within India. As one unit (EOU) dont have output service tax, we get rebate under cenvat credit for the input service taxes. The other one (domestic) is having output service tax and we claimed cenvat credit on the input service taxes. For Ex: in case of export : Rs.1000 is turnover and the input service tax is Rs.100 and in case of domestic service, the output service tax is 120 and input service tax is 60. We claimed Rs 100 as rebate towards export (the input service tax paid) and we paid Rs. 60 after availing cenvat credit (120-60). Service Tax dept denied the claim on the basis assessee cant have both the benefits simultaneously. I would request you to help me out , if is there any case law available so that our claim can be sustained.

[YAGAY andSUN]

The Department has opted the right approach that both the benefits can't be availed simultaneously.  You need to shred any one of the benefits so availed by you.  Otherwise you would have to pay the hefty penalties and interest @ 18% p.a.

AI Summary

Cenvat credit restriction: exporters with separate EOU and domestic units cannot simultaneously claim rebate and cenvat credit; must choose. Whether a taxpayer with separate EOU and domestic service units may simultaneously claim input service tax as an export rebate for the EOU and also avail cenvat credit for input service tax on domestic output; the revenue disallowed concurrent benefits and the advisory position is that the taxpayer must elect one form of relief for the relevant inputs, failing which interest and penalties may follow.