TaxTMI 
TaxTMI 
New Input Service Distribution Mechanism
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....ew Input Service Distribution Mechanism<br> Query (Issue) Started By: - joydeep majumder Dated:- 27-7-2012 Last Reply Date:- 31-7-2012 Service Tax<br>Got 4 Replies<br>Service Tax<br>We have one of our factory located in Jammu & Kashmir (Non Taxable Territory) operating under an excise notification No. 56/2002 with other factories located in Taxable Territory. The finished goods manufactured at th....
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....ese factories are stock transferred to several depots spread across the country (Taxable territory) wherefrom these goods are sold. These Depots including Headoffice are registered under Service Tax as Input Service Distributor. There are certain common input services which are purchased by Depots / HO, pertains to all the factories including Jammu Factory. Example of common services are Advertisi....
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....ng of products which are manufactured by all the factories including Jammu factory. My queries are as below:- 1. Whethe we are allowed to avail the cenvat credit of Input Services attributable to Jammu Factory (Non Taxable Territory) 2. If yes, whether the input servcies attributable to Jammu factory can be allocated to other factories located in taxable territory on prorata basis (Turnover Rat....
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....io). Reply By JAMES PG: The Reply: If there is duty payment under Not 56/02, Input services can be distributed. The turnover for distribution should be as per the turnover prescribed under Rule 5 of Cenvat Credit Rules Reply By joydeep majumder: The Reply: Dear Sir, The exemption Notification 56/2002 has been effected in such a manner that the factory in J&K that thefactory has to first pay e....
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....xcise duty through PLA after availment of available Cenvat balance at the end of each month and then the duty paid through PLA is refunded by way of suo moto credit in account current. In such case can we avail Cenvat credit of service tax attributable to Jammu factory for adjustment with Excise duty liability. Reply By JAMES PG: The Reply: As per the conditions of CCR, input service credit is ....
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....available for the payment of duty on finished goods or for discharging Service Tax for the provision of service. As per Not 56/02, whatever duty paid through PLA is refunded and it provides utilisation by Cenvat also. Hence there appears to be no infirmity in availing Cenvat credit through ISD Reply By Pradeep Khatri: The Reply: Yes, you can distribute the CENVAT credit to the Units established ....
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....at J&K even under the Notification 56/2002- CE as amended by Notification No. 19/2008-C.E. Further, you would have to comply with the conditions as mentioned in the Rule 7 and Rule 7A of the Cenvat Credit Rule, 2004, as amended time to time.<br> Discussion Forum - Knowledge Sharing ....