Central Government vide Notification No. 28/2016-Central Excise (N.T.), Dated: May 26, 2016 has amended CENVAT Credit Rules, 2004 to allow Cenvat credit of KKC to a service provider. Rule 3 of CENVAT Credit Rules, 2004 has been amended to provide the following:

  • Provider of ‘output services’ will be eligible to avail credit of KKC paid
  • Cenvat credit availed (other than KKC) shall not be utilized towards payment of KKC (10thproviso to rule 3(4)) i.e CENVAT credit in respect of KKC shall be utilised only towards payment of KKC.

Thus, unlike SBC, CENVAT credit of KKC paid on input services will be allowed to be used for payment of the KKC on taxable services provided by a service provider. Further, CENVAT credit of Service tax or Excise duty can neither be utilized for payment of KKC nor vice versa

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 28/2016 – Central Excise (N.T.)

New Delhi, the 26th May, 2016

G.S.R.—(E).– In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely : –

1.   (1) These rules may be called the CENVAT Credit (Seventh Amendment) Rules, 2016.

      (2) They shall come into force on 1st of June, 2016.

2. In the CENVAT Credit Rules, 2004, in rule 3,

(a) after sub-rule (1), the following sub-rule shall be inserted, namely :-

“(1a) A provider of output service shall be allowed to take CENVAT credit of the Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016);”;

(b) in sub-rule (4), after the ninth proviso, the following proviso shall be inserted, namely,-

“Provided also that the Cenvat credit of any duty specified in sub-rule (1) shall not be utilised for payment of Krishi Kalyan Cess leviable under section 161 of the Finance Act, 2016 (28 of 2016);”;

(c) in sub-rule (7),

(i) after the words, figures and brackets “sub-rule (1)”, the words, figures and brackets “, sub-rule (1a)” shall be inserted;

(ii) after clause (c), the following clause shall be inserted, namely,-

“(d) Cenvat credit in respect of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016) shall be utilised only towards payment of Krishi Kalyan Cess on taxable services leviable under section 161 of the Finance Act, 2016 (28 of 2016)”;

[F. No. B-1/18/2016 – TRU]

(Anurag Sehgal)

Under Secretary

Note.– The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification No. 23/2004 – Central Excise (N.T.), dated the 10th September, 2004, vide number G.S.R. 600 (E), dated the 10th September, 2004 and last amended vide notification No. 27/2016 – Central Excise (N.T.), dated the 14th May, 2016, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 512(E), dated the 14th May, 2016.

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One Comment

  1. Sonu says:

    hello Sir, Is it possible to take credit of KKC on purchase of Software. software value is over 10 Lakh. For service tax credit, should I take it under capital goods or under services? on KKC no option has seen under capital goods

    (Software valued with service tax and cess only; no VAT was applicable or charged)

    plz advise me.

    thank you in anticipation

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