The duties and taxes which can be considered as per Rule 3(1) of CENVAT Credit rules, 2004 for set off or availment are as follows –
- Basic Excise Duty (First Schedule to CETA)
- Special Excise Duty (Second Schedule to CETA)
- Education cess on excisable goods and on taxable services
- Secondary Higher Education Cess of excisable goods and on taxable services
- Service tax u/s 66 of Chapter V of Finance Act, 1994, as amended
- Service tax u/s 66A of Chapter V of Finance Act, 1994, as amended
- Service tax paid under reverse charge mechanism
- Counter Veiling Duty u/s 3 (3) of Customs Tariff Act on imported goods
The aforesaid duties should have been incurred on input or capital goods received in the premises of the provider of output service on or after 10.09.2004 and the taxes should have been paid on any input service received by the provider of output services on or after 10.09.2004.
The service provider cannot claim credit of additional duty (SAD 4%) leviable under section 3(5) of the Customs Tariff Act, by virtue of proviso to Rule 3(1) (viia) of CENVAT credit Rules 2004
Utilisation of CENVAT credits: -
The CENVAT Credit on inputs, capital goods or on input services can be utilized either for –
- Payment of excise duty on any final product or
- Payment of service tax on output service or
- Reversal of CENVAT credit availed on inputs when the inputs are removed as such or after partial processing or
- Reversal of CENVAT credit on capital goods where the capital goods have been removed as such or
- Payment of amount as required u/r 16(2) of Central Excise Rules 2002 (reversal of CENVAT or payment on transaction value in case of clearance of goods, which had been brought back to the factory for repairs, etc.)
- The credit of education cess (whether on input services or excisable goods) is to be used for payment of education cess and also the credit of SHE cess (whether on input services or excisable goods) is to be used for payment of SHE cess.
Note :It is clarified that Service Tax liability under reverse charge mechanism can be paid only through challan and can not be settled against CENVAT credit as the reverse charge is applicable on Input services and not on output services. Further such tax payment is available for CENVAT credit as tax paid on input services as shown in Sr no 7 in first list.