Cenvat credit of service tax paid on transportation charges

[Lalit Kumar Agarwal]

One of the manufacturing unit is situated at Excise exempted area.Since excise exempted company could not take the benefit of service tax paid for transporter for transporting finished goods. currently company is selling its FG both to Outsider and also to group company. Here i have doubt can company raise a bill of outward transportation expenses in the name of other unit and if that whether other unit can take the credit of ervice tax paid for the transportation expenses.

[Madhukar N Hiregange]

The liability to pay on the reciver of the service is based on the fact whether the receiver is liable to pay the freight or not. If so then even if the sender pays the freight on behalf of the reciver, the reciver can be debited the same and the original documents sent to him. He would then in his own right discgare the ST and avail the credit. For depot trasfers there is no solution.

AI Summary

Cenvat credit entitlement can be claimed when the receiver is liable for transportation and receives supporting documents.
Where the receiver of transportation is liable to pay freight, the receiver can be debited for freight even if the sender pays on the receiver's behalf; original documents should be sent to the receiver, who may discharge the service tax and avail Cenvat credit. No practical solution is available for depot transfers under this arrangement.