Availment of cenvat credit of service tax paid and refdund under rule 5 of cenvat credit rules

[Asked by Guest]

A 100 % EOU unit is manufacturing excisable goods which are exempted from Excise duty by virtue of Notification. The unit has received certain taxable input services for their manufacturing / clearance activities. Further the unit has no DTA sales. Can the unit avail the credit of input service tax paid by them and claim refund under rule 5 of Cenvat credit rules .

[Madhukar N Hiregange]

Yes, the credit of excise duty ( not against CT-3) and service tax is eligible for refund.

[Madhukar N Hiregange]

It should be possible I see no bar of the same.

Under Cenvat credit Rule 5 plain reading with specific conditions,refund of Excise duty is eligible on inputs & Service tax credit received in 100% EOU, please also refer N/No. 22/2003 & 23/2003 Dt. 31.03.2003 Also please refer Service tax notification No. 40/2007 Dt. 17th Sept.2007 provides eligibility for availing refund of service tax credit

[RadheyShyam Mangal]

yes kindly refer the following rule of CCR, 2004:- [5. Refund of CENVAT credit: - Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, (i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:

AI Summary

Cenvat credit refund: EOU may reclaim service tax credit where input services are used in export-linked manufacture.
Under Rule 5 of the Cenvat Credit Rules, where inputs or input services are used in manufacture of final products cleared for export under bond or letter of undertaking, or in providing exported output services, the CENVAT credit (including input service tax) may be utilized against excise or service tax liabilities or, if such adjustment is not possible, refunded subject to prescribed safeguards and conditions; this permits a 100% EOU that uses taxable input services in export-linked manufacture and has no DTA sales to claim refund of service tax credit under the notified framework.