Clarification - Cenvat Credit

[ranganath shenoy]

Dear Sirs, 1)Is there a mandate in the cenvat credit rules that in a case where there is both exempted and taxable output services,the apportionmemt of credit has to be done irrespective of the fact that the input service is exclusively used for providing taxable service.2)What is the status of unutilised credit available on 31-03-2008,is old rule applicable or the new rule of apportionment.3)Can vacant land rent be considered as exempted service

[Guest]

1. As per the present Rule 6 of CCR, even in the case where the input service is exclusively used for providing output service, options as provided in Rule 6(3) is to be followed in case of non-maintenance of separate records of utilisation 2. Where Rule 6(3) is applicable, it is view of the department that unutilised credit as of 31/03/08 is not eligible for adjustment and will lapse, but i feel this is a disputed issue. 3. As renting of property is defined as service, renting of vacant land (which is not subject to tax) will be treated as exempted service as per the definition of exempted service in CCR, 2004.

[Surender Gupta]

There is no provision in Cenvat Credit rules that for certain input services you maintain separate records and for other services you maintain common records. You have to choose either of the option. Further, you are entitled to carry forward the unutilized credit.

AI Summary

Clarification on Cenvat Credit Rules: Rule 6(3) Options, Unutilized Credit Status, Exempted Services, and Record Maintenance Dispute. A query was raised regarding Cenvat Credit rules, specifically about the apportionment of credit when both exempted and taxable services are involved, and the status of unutilized credit as of March 31, 2008. One response clarified that Rule 6 of the CCR requires following options in Rule 6(3) if separate records are not maintained, and unutilized credit may lapse, though this is disputed. Renting of vacant land is considered an exempted service. Another response stated that separate records cannot be selectively maintained for certain input services and that unutilized credit can be carried forward.