The Central Board of Excise and Customs (CBEC) has issued a circular clarifying the position of CENVAT credit availment in respect of following issues:
Credit availment on input services received from Associate Enterprises
Rule 4(7) of the CENVAT Credit Rules, 2004 provides that the CENVAT credit on input services is available only after the day on which payment of the value of input service and service tax is made.Further, section 67(4) of the Finance Act, 1994 provides that the expression “gross amount charged” includes payment made by way of issue of credit! debit notes or by entries in the books of account, where the transaction is with any Associate Enterprise. Considering these provisions, it has now been clarified that in case of services received from Associate Enterprise, CENVAT credit of service tax can be availed in cases where the payment towards services provided is deemed to have been made to the service provider by way of book adjustments! issuance of debit or credit notes and the service tax has been paid to the credit of Government Account.
Credit availment on input service invoices settled by way of discounted payments! refunds
In cases where the service receiver reduces the amount mentioned in the invoice / bill / challan and makes discounted payments against the input service invoice due to any reason, the invoice will stand amended to that extent. The service receiver will be entitled to avail the CENVAT credit equivalent to the amount that is paid as service tax.
It has been further clarified that, in cases of subsequent refund or extra payment of service tax towards the invoice, the credit availment should be altered accordingly.
Source
1. Circular No. 122/03/2010-Service Tax dated 30 April, 2010.
