Who can avail Cenvat credit:<\/strong><\/p>\n

The provider of taxable output service can take the cenvat credit. According to Cenvat Credit Rules, 2004, \u201coutput service\u201d means any service provided by a provider of service located in the taxable territory, but shall not include a service specified in section 66D of Finance Act, 1994 or where the whole of service tax is liable to be paid by the recipient of service. i. e. service receiver, who is paying service tax on behalf of the service receiver, cannot avail cenvat credit.<\/p>\n

Conditions for availing cenvat credit:<\/strong><\/p>\n

On inputs\/raw material:<\/span><\/p>\n

Credit can be taken instantly on receipt of the raw material. It should be remembered that credit is allowed only for those inputs\/raw material which are\/is used in providing output service. When inputs on which credit has been taken are removed, equal credit should be reversed except in cases where the inputs are removed to job worker or removed for the purpose of providing output service.<\/p>\n

On capital goods:<\/span><\/p>\n

The cenvat credit in respect of capital goods received in the premises of provider of output service, only 50% of credit of is eligible in the first year of receipt. The balance 50% can be taken in any financial year subsequent to the financial year in which the capital goods were received in the premises of the provider of output service. Cenvat credit is not allowed on the amount of duty which has been claimed as depreciation.<\/p>\n

Utilisation of Cenvat Credit:<\/strong><\/p>\n

Cenvat credit can be used for payment of tax, i. e. service tax, education cess (EC) & secondary and higher education cess (SHEC) on output service. The credit taken on EC and SHEC can be utilised only for payment of EC and SHEC
\nrespectively.<\/p>\n

According to Rule 2(e) of Cenvat Credit Rules, 2004\u2019 \u201cexempted service\/s\u201d means: taxable services which are exempt from the whole of the service tax leviable thereon, and includes services on which no service tax is leviable under section 66 of the Finance Act; or taxable service whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service will be taken. Hence, the input credit cannot be used exclusively in for against the liability of output service, if both taxable and exempted services are being provided.<\/p>\n","protected":false},"excerpt":{"rendered":"