Credit availability of the service tax as per the invoice

[Asked by Guest]

Chapter 106 Credit of Service Tax and Excise duty, in this chapted speccified 16 input services, credit would be disallowed when these services ared used exclusively in providing exempted services, otherwise full credit would be allowed. Query : For the above chapter, mention in 16 services, can we interprate that all the bills are came in to the address of factory premises, including any of the specified in 16 services are elligible for credit? (i.e. we have insurance policy of plant Rs.1010200, (premium rs.100000 and service tax is 10200), can we take the full credit of Rs.10200?)vijay chitte

as per my opinion : as per rules "Input Service" used by the manufacturere whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removel. For the above rules we are doing all activities releting to my product (i.e. sales executive's travelling exp,Telephone bills, computer networking, Freight exp, Travelling etc. all the services are used in relation to my product as per rule.) so we can take all the credit of input services. For this your valuable comments are requested.

[Surender Gupta]

As per rule 2(l) of the Cenvat Credit Rules, 2005 - Input service must be used in or in relation to manufacture of Excisable Goods. Insurance Policy is not in or in relation to manufacture of goods but it is qualifing as input service in terms of inclusive definitions of rule 2(l) and accordingly you may take credit for the same. However, if the relevant machine is used exclusively to manufacture excisable goods you are entitled to take full credit otherwise you are required to follow rule 6(2) or 6(3) of the Cenvat Credit Rules. Further, If you receive the bills in the name of other premises of the manufacturer, there is a concept of Input Service Distributor, you may follow the procedure accordingly to distribute the credit of input services received by other offices.

AI Summary

Input service credit available for insurance premiums used in relation to manufacture; apportionment and distribution rules apply.
Service tax credit is available where a service qualifies as an Input Service and is used in or in relation to manufacture or clearance of excisable goods; insurance premiums can qualify and attract credit. Full credit is permitted for assets used exclusively in manufacture, while mixed use requires apportionment under the Cenvat Credit Rules. Credits billed to other premises may be shared through the Input Service Distributor mechanism.