1. ORGANISED by WIRC OF ICAI 8th August,2012CA RAJIV LUTHIA1 A candle loses nothing by lighting another candle.

2. DISCUSSION IS EXCHANGE OF INTELLIGENCE ARGUMENT IS EXCHANGE OF IGNORANCE Presented By RAJIV LUTHIA  CENVAT CREDIT RULES, 2004 8th August,2012CA RAJIV LUTHIA2

3. CENVAT CREDIT RULES,2004  Introduced w.e.f. 10 th September,2004  Credit of service tax not available/utilizable in Jammu & Kashmir. 8th August,2012CA RAJIV LUTHIA3

4. MODVAT/ ST CREDIT RULES 8th August,2012CA RAJIV LUTHIA4 Prior to 10.9.2004 Manufacturer of Goods Credit available of duty paid on inputs/capital goods Service provider Credit available of service tax paid on input services

5. CENVAT CREDIT RULES 8th August,2012CA RAJIV LUTHIA5 Post 10.9.2004 Manufacturer of Goods Credit available – duty/service tax paid on inputs/capital goods/input services Service provider

6. Capital Goods Means  Goods which are specified in certain chapters of 1 st Schedule of CE Act,1944 ;  Pollution control equipment.  Components, spares and accessories of the goods specified above.  Moulds and dies, jigs and fixtures.  Refractories and refractory materials.  Tubes and pipes and fittings thereof; and  Storage tank  Motor vehicle other than those falling under tarrif 8702, 8703, 8704,8711 & their chassis but including dumpers & tippers. 6 Used In the factory of mfgr of final products But does not include equipment/ appliances used in office for generation of electricity for captive use within the factory Chapter 82Tools, hand tools, knives etc Chapter 84Machinery and mechanical appliance Chapter 85Electrical Machinery, Equipment and parts etc. Chapter 90Measuring, checking, precision or testing instruments Hdg 68.05 & 68.04grinding wheels & parts thereof For providing output service OR 8th August,2012CA RAJIV LUTHIA

7.  Dumpers, Tippers, Motor Vehicle other than those falling under tariff heading 8702, 8073, 8704, 8711 & their chassis e.g. cranes, forklifts, utility vehicle, ambulance etc. 8th August,2012CA RAJIV LUTHIA7 MOTOR VEHICLES COVERED Tariff Heading Description 8702Motor vehicles for the transport of 10 or more persons including driver 8703Motor cars & other motor vehicles principally designed for the transport of persons (other than 8702) including station wagons & racing cars 8704Motor vehicles for transport of goods 8711Motor cycles (including mopeds) & cycles fitted with an auxiliary motor, with or without side-cars.

8.  Motor Vehicle designed for transportation of goods, their components, spares, accessories, chassis……….registered in name of service provider & used for  Providing output service of renting of motor vehicle; or  Transportation of inputs & capital goods for providing an output service or  Providing courier agency services 8th August,2012CA RAJIV LUTHIA8 CG MEANS…. Such Motor Vehicle NOT CG FOR A MANUFACTURER

9.  Motor Vehicle designed for carrying passengers, their components, spares, accessories, chassis ………. registered in name of service provider & used for  Transportation of passengers or  Renting of such motor vehicle or  Imparting Motor Driving Skills 8th August,2012CA RAJIV LUTHIA9 CG MEANS…. Such Motor Vehicle NOT CG FOR A MANUFACTURER

10. 8th August,2012CA RAJIV LUTHIA10 WHICH MOTOR VEHICLE?….CG FOR WHOM?… VehicleCG FOR Manufacturer CG For SP Dumpers/Tippers/Motor Vehicles not falling under 8702,8703,8704,8711 & chassis Motor vehicles used for transportation of goods  (for certain SP) Motor vehicles used for transportation of passengers  (for certain SP)

11. 8th August,2012CA RAJIV LUTHIA11 CONDITIONS FOR ALLOWING CENVAT CREDIT….  Upto 50% of the credit is allowed in the FY in which CG is received in factory/premises & Balance in the subsequent year, if the possession of the asset remains with SP/mfgr................Rule 4(2)  SSI units can avail 100% of CENVAT in the same FY, subject to condition specified in notification for SSI units.....  Credit allowable even if CG are acquired on lease/hire purchase/loan agreement from financing company…………….Rule 4(3)  If the CG is removed as such in the same FY, then entire credit is allowed in the same FY.  Credit of additional duty levied U/r 3(5) of Customs tariff Act shall be allowed immediately on receipt of CG in the factory of manufacturer.

12. CONDITIONS FOR ALLOWING CENVAT CREDIT….  No CENVAT on part of value of CG which represents the amount of duty on which depreciation is claimed.............Rule 4(4)  Jigs, fixtures, moulds & dies sent by manufacturer to a job worker can avail credit on them.…………Rule 4(5)(b)  Inputs, CG partially processed sent to job worker for further process or manufacture etc. on maintenance of relevant records thereto & Input/CG received back in factory within 180 days…………Rule 4(5)(a)  No CENVAT Credit to be availed, if CG is exclusively used for purpose of mfg of exempted goods (other than exemption provided by way of notification granting exemption based upon value or quantity)...Rule 6(4) 8th August,2012CA RAJIV LUTHIA12

13. CG REMOVED ……. 8th August,2012CA RAJIV LUTHIA13  Rule 3(5) & (5A) RemovedBy whomEffect Inputs or CG as suchmfgr or SP Pay/reverse CENVAT credit taken except when removed (i)as free warranty of product (ii)For providing output service CGAfter being used or waste or scrap mfgr or SP Higher of the following : a)Pay/reverse CENVAT credit taken after reducing the prescribed % b)Pay duty on transactional value

14. CG REMOVED…. 8th August,2012CA RAJIV LUTHIA14  Rule 3(5B) ParticularsBefore put to use By whomEffect Inputs or CG written off fully or partially or provision for the same is made in the books Mfg or SPPay/reverse CENVAT credit taken If such Inputs/CG used subsequently by manufacurer/service provider........then entitled to take credit of Cenvat paid earlier

15. Input Means Input means all goods used in the factory by the manufacturer of the final product; or Any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or all goods used for generation of electricity or steam for captive use; or all goods used for providing any output service; BUT EXCLUDES................... 8th August,2012CA RAJIV LUTHIA15

16. (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; (B) capital goods except when used as parts or components in the manufacture of a final product; (C) motor vehicles; (D) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and (E) any goods which have no relationship whatsoever with the manufacture of a final product. 8th August,2012CA RAJIV LUTHIA16 INPUT EXCLUDES

17. (F) any goods used for- construction or execution of works contract of a building or a civil structure or a part thereof; or laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of works contract or construction service 8th August,2012CA RAJIV LUTHIA17 INPUT EXCLUDES

18. CENVAT on Inputs/CG  Inputs should not be used wholly for exempted goods/service........Rule 6(1)  CENVAT Credit in respect of inputs/capital goods may be taken by SP when inputs/capital goods are received in the factory or premises of manufacturer/SP………….OR delivered to such service provider, subject to maintenance of documentary evidence of delivery & location of the inputs/capital goods..............Rule 4(1), 4(2)(a) Erstwhile provisions:- There was requirement for receipt of inputs & capital goods in the premises of SP which is now dispensed with.

19. Input Service means  Any service used by provider of taxable service for providing an output service; or  Any service used by manufacturer in relation to manufacture of final products and clearance of final products up to the place of removal. and includes  services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises,  advertisement or sales promotion,  market research,  storage up to the place of removal,  procurement of inputs,  accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, Business Exhibition, Legal Services  inward transportation of inputs or capital goods &  outward transportation up to the place of removal. BUT EXCLUDES.................................................. 8th August,2012 CA RAJIV LUTHIA 19

20. Input Service…Exclusion  Services in relation to outdoor catering, beauty treatment, health services, cosmetic & plastic surgery, membership of a club, health & fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee.  Works Contract Services or Construction Services used for Construction or execution of works contract of a building or a civil structure or a part thereof; or Laying of foundation or making of structures for support of capital goods……..except used for providing Works Contract Services or Construction Services 8th August,2012CA RAJIV LUTHIA20

21. Input Service…Exclusion  Services of renting of motor vehicle...... unless motor vehicle is capital goods 8th August,2012CA RAJIV LUTHIA21 Input Service (IS)IS FOR Manufacturer IS For SP IS of Renting of Dumpers/Tippers/Motor Vehicles not falling under 8702,8703,8704,8711 & chassis IS of Renting of Motor vehicles used for transportation of goods  (for certain SP) IS of Renting of Motor vehicles used for transportation of passengers  (for certain SP)

22. Inputs Service…Exclusion  Services of general insurance business, servicing, repair and maintenance related to motor vehicle which is not capital goods…..except o Used by manufacturer of motor vehicle o Insurance Company in respect of vehicle insured 8th August,2012CA RAJIV LUTHIA22

23. CONDITIONS FOR ALLOWING CENVAT ON IS 8th August,2012CA RAJIV LUTHIA23  IS should not be used for wholly exempted goods/services.......Rule 6(1)  Credit on Invoice raised prior to 31/3/11....  A llowed on or after the day on which payment for value of input service & service tax thereon is made

24. CONDITIONS FOR ALLOWING CENVAT ON IS 8th August,2012 CA RAJIV LUTHIA 24 Invoice raised after 1/4/2011 Day on which invoice, bill or challan is received.......Rule 4(7) General provision Day on which payment made of ST along with value of service charges ST payable.. reversal charge mechanism CONDITIONS:-  in case the payment for value of IS & ST thereon is not made within 3 months from the date of invoice/bill/challan, the manufacturer/SP to pay an amount equal to CENVAT Credit availed on such input service.  Later, Manufacturer/SP is entitled to take such CENVAT Credit on payment of value of IS & ST thereon.  In case of credit note or refund of value of IS & ST thereon, CENVAT credit to be reversed /paid on or before the due date of relevant Month/Quarter

25. POINT AT WHICH CENVAT CREDIT IS AVAILABLE Receipt of goods in premises or delivery made subject to documentary evidence of delivery & location of inputs Capital Goods Receipt of goods in premises or delivery made subject to documentary evidence of delivery & location of inputs Input invoice/bill issued before 1/4/11..... Payment of value of service & ST thereon Invoice/bill issued after 1/4/11....... Date on which invoice is received, subject to conditions If under reverse charge..When payment made Input Service 8th August,2012 CA RAJIV LUTHIA 25

26. (1) Taxable service which is exempt from the whole of the ST, (2) Service, on which no service tax is leviable (3) 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, shall be taken; But shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994) “Output Service” means …..  Any taxable service provided by service provider located in taxable territory but doesn’t include  Service specified in Section 66D of the Act…..i.e. Negative List  Where the whole of ST payable by recipient of service “Exempted Service” means….. “Exempted Goods” means…..  Excisable goods which are exempt from the whole of the duty of excise leviable thereon, &  Includes goods which are chargeable to “Nil” rate of duty &  Goods in respect of which benefit U/n 1/2011-CE is availed or specified entries in notification no. 12/2012-CE is availed 26 8th August,2012CA RAJIV LUTHIA

27. Specified duties/taxes eligible as CENVAT credit Basic Excise Duty (except duty paid U/n 1/2011-CE) Special Excise Duty Additional duty on Textiles and Textiles articles Additional duty on ‘goods of special importance’ Countervailing duty on imports National Calamity Contingent duty Additional duty of leviable U/s.3(5) of Custom tariff Act,1985– VAT (SP not eligible) Additional duty of excise on tea Service tax paid under Sec 66,66A,66B Ed cess on excisable goods/service tax S& H Ed Cess on excisable goods/service tax Additional duty of Excise on pan masala and tobacco products 278th August,2012CA RAJIV LUTHIA

28. CENVAT credit can be utilised for following payments  Any excise duty on final product;  CENVAT Credit taken on input if such inputs are removed as such;  CENVAT Credit taken on capital goods if such capital goods are removed as such;  Amount under Rule 16(2) of the Central Excise Rules, 2002. (payment of CENVAT on account of sales return)  Service Tax on any output service.  While paying duty/tax, the CENVAT Credit shall be utilized only to the extent of such credit available on the last day of month or quarter as the case may be for payment of duty/tax relating to the month or qtr.  Provided CENVAT credit shall not be utilized for payment of duty on goods for which exemption under notification no.1/2011-CE is availed. (Goods on which 1% duty is levied)  CENVAT cannot be used for payment of ST in respect of services where the person liable to pay tax is the service recipient 8th August,2012 CA RAJIV LUTHIA 28

29. Utilization of CENVAT Credit 8th August,2012CA RAJIV LUTHIA29

30. Transfer of Credit…Rule 10 In case of shift of factory or transfer of business on account of change in ownership or sale, merger, amalgamation, lease or transfer, the Transferee is entitled for unutilized credit of sold/merged/amalgamated/leased factory provided Stock of inputs/WIP is also transferred along with factory or ownership ;& input/capital goods on which credit is availed are duly accounted for to the satisfaction of AC/DC 8th August,2012CA RAJIV LUTHIA30

31. Obligation…Rule 6 8th August,2012CA RAJIV LUTHIA31  Rule 6(1)…….NO CENVAT to be allowed on qty of inputs/inputs services used in mfg of EG or for providing ES except as provided in Rule 6(2)  Rule 6(2).................... Separate A/c’s to be maintained for receipt, consumption, inventory etc for Inputs/Input Service........ CENVAT allowed only for Inputs/input Service used in relation to mfg of dutiable goods or for providing taxable service

32. Obligation…Rule 6 8th August,2012CA RAJIV LUTHIA32  Rule 6(3).... NOTWITHSTANDING anything contain in Rule 6(1) or 6(2)..... assessee opts not to maintain separate A/c’s shall follow any 1 option:- i. Pay 6% on value of exempted goods & services...... In case ED is paid on EG, the same shall be reduced from 6% If any abatement in respect of taxable services is granted with a condition for non availment of CENVAT Credit. the amount to be paid shall be 6 % of the value so exempted In case of transport of goods/passenger by rail, the amount to be paid shall be 2 % of the value so exempted ii. Make proportionate reversal as per Rule 6(3A) (proportionate reversal) iii. Hybrid option: maintain separate A/c’s for Inputs & make proportionate reversal for Input Services

33. Obligations of provider of taxable & exempted services 8th August,2012CA RAJIV LUTHIA33 Option available for SP of taxable & exempted Services/goods Maintain separate A/c’s for receipt, consumption & inventory of input & input service Not to maintain separate A/c’s but shall follow either of following options Pay: 6% on Mfg of EG & Exempted Service Reverse/pay: the CENVAT attributable to the Ip/IS used in relation to mfg of EG/ providing of ES as per condition& procedure Under sub-rule 6(3A) Rule 6(1)……. No CENVAT to be allowed on qty of Inputs/input service exclusively used in mfg of exempted goods or provision of exempted service. Hybrid option :- Separate A/c’s for Inputs & Reversal for Input Service

34. Conditions for option of proportional reversal  The provider of output service shall intimate in writing in the beginning of F.Y. to the superintendent of CE giving the following particulars namely :-  name, address and registration No. of the manufacturer of goods or provider of output service;  date from which the option under this clause is exercised or proposed to be exercised;  description of dutiable goods or taxable services;  description of exempted goods or exempted services;  CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition;  Option once exercised can not be withdrawn during the remaining part of financial year.  Rule 6(3A)(b) & (c) provides the mechanism for determining the amount equivalent to CENVAT Credit attributable to inputs/input service used in relation to provision of exempted services. 34CA RAJIV LUTHIA8th August,2012

35. RULE 6(3A)… conditions for option of proportional reversal under rule 6(3)(ii) Reversal mechanism (for input service)………  Calculation to made for every month (Provisional):- Exempted Services/Goods (for preceding FY) CENVAT on IS Exempted Services/Goods + taxable services/Goods (For preceding FY) 358th August,2012CA RAJIV LUTHIA

36. RULE 6(3A)… conditions for option of proportional reversal under rule 6(3)(ii) Reversal mechanism (for input service)………  Calculation to made for Current F. Y. (Final calculation):- Exempted Services/Goods (for Current FY) CENVAT on IS Exempted Services/Goods + taxable services/Goods (For Current FY) 368th August,2012CA RAJIV LUTHIA

37. RULE 6(3A)… conditions for option of proportional reversal  the short paid amount arising due to the reversal mechanism provided under Rule 6(3A) (b) & (c) to be paid on or before 30th June of the succeeding financial year.  the interest rate for payment of short paid amount after 30th June is 24% per annum.  the excess amount arising due to the reversal mechanism provided under Rule 6(3A) (b) & (c) to be adjusted suo motu, by taking credit of such amount.  SP shall intimate to the jurisdictional superintendent of Central Excise, within a period of 15 days from the date of payment as per under (Rule 6(3A)(d) or adjustment of the excess payment in the CENVAT credit (Rule 6(3A)(f) ….. Information in prescribed format 378th August,2012CA RAJIV LUTHIA

38. RULE 6(3A)… conditions for option of proportional reversal  In case of CENVAT attributable to exempted goods/service cannot be determined due to no dutiable goods manufactured/ taxable service provided in preceding year…….The Reversal exercise to be done at the end of financial year and not on monthly basis  Rule 6(3B) provides that a banking company & a financial institution including NBFC providing services by way of extending deposits, loans or advances to pay an amount equal to 50% of CENVAT credit availed on inputs & input services every month.  Rule 6(3D) provides that in cases where any abatement in respect of taxable services is granted with a condition for non availment of CENVAT Credit, payment of amount under Rule 6(3) shall be deemed to be CENVAT Credit not taken for the purpose of exemption notification. 38CA RAJIV LUTHIA8th August,2012

39. “Value”  Shall have the same meaning as assigned to in section 67 of The Finance Act, 1994  In case of trading, the value for the purposes of Rule 6(3) & Rule 6(3A) shall be higher of :-  the difference between the sale price & the cost of goods sold (determined as per the generally accepted accounting principles without including expenses incurred towards their purchases) or  10% of cost of goods sold  In case of trading in securities, value shall be higher of  Difference of Sale Price & Purchase Price of securities ;or  1 % of the Purchase price 398th August,2012CA RAJIV LUTHIA

40. “Value”  Value shall not include value of service by way of extending deposits, loans or advances if the consideration is represented by way of interest or discount.  In case of availing option under Rule 6 (7), (7A), (7B) or (7C) of the STR, 1994, the value shall be the amount of value which when calculated @ rate U/s 66B resulted into same service tax amount. 408th August,2012CA RAJIV LUTHIA

41. Other conditions  Rule 6(4) provides that the capital goods shall not be exclusively used for purpose of manufacture of the exempted goods (other than vide notification where exemption is granted based upon value or quantity)  Rule 6(6A) inserted whereby provision of Rule 6(1) to Rule 6(4) are not applicable in case the taxable services are provided without payment of service tax to a developer/unit of SEZ for their authorized operations………retrospectively amended w.e.f. 10 th February, 2006 vide Finance Act, 2012  Rule 6(6)…..Provision of Rule 6(1) to Rule 6(4) are not applicable in case of excisable goods removed without payment of duty under certain circumstances 418th August,2012CA RAJIV LUTHIA

42. Other conditions  Rule 6(7)… Provision of Rule 6(1) to Rule 6(4) are not applicable in case in case the taxable services are provided without payment of service tax to a developer/unit of SEZ for their authorized operations or when a service is exported  Rule 6(8)……Service for the purpose of Rule 6 shall not be treated as exempted service when:  Service is export of service in view of Rule 6A of Service Tax Rules, 1994 and payment for which received in CFE; and  Even If CFE not received within 6 months or extended period granted by RBI from date of provision of service 428th August,2012CA RAJIV LUTHIA

43. Documents for availing CENVAT credit Invoice by manufacturer/importer/1 stage dealer/2 stage dealer Invoice/Bill/challan issued by provider of input service under reverse charge GAR-7 Challan Invoice/bill/challan issued by Input Service Distributor Bill of Entry Supplementary invoice issued by manufacturer/ importer of Inputs /CG in terms of CE Rules, 2002 in case of additional excise duty except when such amount became recoverable on account of short levy/non levy on grounds of fraud, collusion etc with intent to evade tax Supplementary invoice issued by SP except when such amount became recoverable on account of short levy/non levy on grounds of fraud, collusion etc with intent to evade tax The invoices/Bill/challan should contain all the details prescribed under CER, 2002 & STR, 1994. In absence of all such details, AC/DC as the case may be, may allow the CENVAT credit after being satisfied 43

44. Interest  Rule 14 amended w.e.f 17 th March, 2012, whereby the manufacturer/service provider to pay interest only when the CENVAT credit has been taken and utilized wrongly or has been erroneously refunded. HON’BLE SUPREME COURT IN THE CASE OF UOI VS IND- SWIFT LABORATORIES LTD 2011-TIOL-21-SC-CX  held that the interest is payable from date of taking Credit & not from the date when the CENVAT credit is utilized.  Rule 14 of CCR, 2004 provides that where CENVAT credit has been “taken” OR “utilized wrongly” OR “has been erroneously refunded”, the same along with interest would be recovered from the manufacturer or the provider of the output service.  On the happening of any of the three aforesaid circumstances such credit becomes recoverable along with interest from the date of availment of CENVAT Credit.  Relying on the above decision of Apex court, CBEC has issued similar clarifications vide circular No.942/03/2011-CX Dated 14 th March, 2011 8th August,2012CA RAJIV LUTHIA44

45. Interest HON’BLE Karnataka High Court in the case of CST Vs. Bill Forge Pvt Ltd 2011 (TIOL) 799 held that Credit of excise duty in the register maintained for the said purpose is only book entry. Before utilization of such credit, the entry has been reversed, it amounts to not taking of credit. Interest is compensatory in character, and is imposed on an assessee, who has withheld payment of any tax, as and when it is due and payable. Interest U/s 14 not payable if credit reversed before utilization of CENVAT credit. 8th August,2012CA RAJIV LUTHIA45

46. Returns Manufacturer – monthly return within 10 days from the end of the month. However, if manufacturer is availing exemption under notification based on value/quantity of clearance in a financial year, he shall file quarterly return SP- half yearly return in Form ST-3 within one month of the end of half year ISD- half yearly return Form ST-3 within one month of the end of half year Revised return to be filed within 60 days from the date of submission of original return 8th August,2012CA RAJIV LUTHIA 46

47. Penalties Particulars of contraventionIn respect ofPenalty Availment or Utilization of CENVAT Credit wrongly or in contravention of any provisions Inputs/CG/ISGoods liable for confiscation & Penalty not exceeding the amount of duty/tax or Rs.2,000/- whichever is higher. Wrong availment/ utilization of CENVAT Credit due to fraud, collusion, willful misstatement etc with intent to evade payment of duty Inputs/CG/ISOver and above the penalty stated in item no.1, the penalty U/s.11AC of The Central Excise Act, 1944 shall be levied i.e. 100% of the duty sought to be evaded by the manufacturer. 8th August,2012 CA RAJIV LUTHIA 47

48. Penalties Particulars of contravention In respect ofPenalty Wrong availment/ utilization of CENVAT Credit due to fraud, collusion, willful misstatement, suppression or contravention of any provision with intent to evade payment of tax Inputs/CG/ISOver and above the penalty stated in item no.1, the penalty U/s.78 of The Finance Act, 1994 shall be levied i.e. 100% of the service tax sought to be evaded by the service provider. General Penalties- For contravention of any provisions of CCR,2004 for which no penalty is provided Upto Rs 5,000/- CA RAJIV LUTHIA 48 8th August,2012

49. Input Service Distributor  Means an office of the manufacturer or producer of final products or provider of output service which receives invoice towards IS…….. for the purpose of distributing the credit of ST paid on the said services to such manufacturer or producer or provider, as the case may be. CONDITIONS FOR DISTRIBUTING CREDIT:  The credit distributed against a document does not exceed the amount of service tax paid thereon  No distribution allowed in respect of ST attributable to services used in unit exclusively engaged in manufacture of exempted goods or providing exempted service. 8th August,2012 CA RAJIV LUTHIA 49

50. Input Service Distributor CONDITIONS FOR DISTRIBUTING CREDIT:  Credit of service tax attributable to service used wholly in a unit shall be distributed to that unit only  Credit of service tax attributable to service used in more than one unit shall be distributed pro-rata on the basis of the turnover during the relevant period of the concerned unit to the sum total turnover of all the units to which the service relates during the same period  In case of assessee do not have any total turnover in the said period, the ISD shall distribute credit only after the end of such period wherein the total turnover of its unit is available  Relevant period shall be the month previous to the month during which the CENVAT is distributed. 8th August,2012 CA RAJIV LUTHIA 50

51. Input Service Distributor  Total turnover to be determined as per Rule 5 (i.e refund to exporters)  Sum of :-  All excisable goods cleared including exempted goods, dutiable goods & excisable goods exported  Export turnover & the value of all other services  All inputs removed U/r 3(5) against an Invoice  Export turnover of service = pymt rcd during relevant period + export services whose provision has been completed for which payment had received in advance earlier – advance received for which the provision of service has not been completed during the relevant period.  Value of other services = as per Rule 6(3) 8th August,2012 CA RAJIV LUTHIA 51

52. REFUND OF CENVAT The manufacturer who clears final/intermediate product for export without payment of a duty under bond or undertaking which is cleared for export or provider of output service which is exported without payment of Service Tax shall be allowed refund of CENVAT Credit as determined by the formula. Refund amount = (Export Turnover of goods + Export Turnover of Service) * NET CENVAT Total turnover The procedure & conditions for filing refund claim are prescribed U/n. 27/2012-CX (NT) dated 20 th June, 2012 Refund claim is required to be filed within a period of 1 year. No refund shall be allowed if claim for drawback under customs & CE Duty Drawback Rules, 1995 is allowed. 52 8th August,2012 CA RAJIV LUTHIA

53. REFUND OF CENVAT to SP providing services taxed on reverse charge basis A provider of service providing services notified U/s. 68(2) & being unable to utilize the CENVAT credit availed on Inputs & Input Services for payment of service tax on such output services, shall be allowed refund of such unutilized CENVAT credit subject to procedure, safeguard, conditions & limitation as may be specified 538th August,2012CA RAJIV LUTHIA

54. 54 CA. Rajiv Luthia R.J.Luthia & Associates Chartered Accountants Ph : 2564 1553/2569 4989 Email: rajiv@rjl.co.in 8th August,2012 CA RAJIV LUTHIA