We have a Central Excise registration. Please clarify whether we are required to pay duty equivalent to the amount of Cenvat credit availed on capital goods when these are cleared for export under bond in terms of Rule 19 of Excise Rules?
As per Rule 3(5) of the Cenvat Credit Rules, 2004 when capital goods on which Cenvat credit has been taken, and are removed as such from the factory, the manufacturer of the final product is required to pay an amount equal to the credit availed of in respect of such capital. However, Rule 19 of the Central Excise Rules, 2002 provides that any excisable goods may be exported without payment of duty from a factory of the producer provided the conditions and procedures as specified by the board in this regard are duly complied with. From a conjoint reading, we are of the view that though Rule 3(5) of the CCR provides for payment of duty equivalent to Cenvat credit availed of when the capital goods are removed as such, however, Rule 19 of the CER provides that no duty shall be payable when the capital goods are exported in terms of Rule 19 of the CER. Accordingly, no duty shall be payable when the capital goods are exported in terms of Rule 19 of the Central Excise Rules. In the case of Videocon International Ltd. Vs CCE [2009 (235) ELT -135 (T)], wherein the Ahmedabad Tribunal held that no duty is payable in terms of Rule 3(5) of the CCR, when capital goods have been exported in terms of Rule 19 of the Central Excise Rules.
Service recipient has to pay entire tax on manpower supply
As a partnership firm we provide Manpower Supply Services and are registered under service tax. We have discharged service tax liability for March 2015 @ 12.36% on 25% of the value of services, after claiming the abatement. We wish to know the applicable value on which we are liable to pay service tax subsequent to the amendment in the Budget session 2015?
Prior to April 1, 2015 in case of manpower supply service, the service recipient was liable to pay service tax on 75% of the value of service and balance 25% was required to be paid by the service provider. However, from April 1, the service recipient would be liable to pay service tax on the entire value of service i.e. 100 % of the value of service. So, you are not required to pay any service tax on manpower supply service, and the entire amount of service tax is to be paid by service recipient.
Abhishek Jain and Achal Chawla
The replies do not constitute professional advice. Neither EY nor FE is liable for any action taken on the basis of these replies. Readers may mail their queries to firstname.lastname@example.org