Input Service Distributor - Cenvat Credit - Ready Reckoner [OLD] - Cenvat Credit

Input Service Distributor (ISD) Reference: Rule - 2 - Definitions Rule - 7 Manner of Distribution of Cenvat credit by ISD FAQ www.taxmanagementindia.com Reply Who is Input Service Distributor? Input service distributor has been defined in Rule 2(m) of CCR, 2004 . A manufacturer or service provider may have head office or regional office at different places. The services may be received at head office/ regional office, but ultimately, these will be indirectly used for manufacturer or providing output service. Provision has been made to avail Cenvat credit of services received and paid at head office/ regional level. Such head office/ regional office can be registered as Input Service Distributor and it can issue invoice on the manufacturer or service provider. What is the manner of distribution of input services in case of ISD? [Upto 31.3.2016] Rule 7 of the CCR, 2004 The distribution should be as follows: Credit distributed should not be more than credit of input service tax available. Credit of service tax attributable to services used by one or more units exclusively engaged in manufacturing of exempted goods or providing of exempted services shall not be distributed. Credit of service tax attributable to services used wholly in a unit shall be distributed only to that unit Credit of service tax attributable to service used by more than one unit shall be distributed pro rata on the basis of the turnover of such units during the relevant period to the total turnover of all its units, which are operational in the current year, during the said relevant period. Circulars relating of ISD 178/4/2014-ST - dated - 11-07-2014 Rule 9 (10) and Rule 9 (11) of CCR, 2004 The input service distributor, shall furnish a half yearly return giving the details of credit received and distributed during the said half year to the jurisdictional Superintendent of Central Excise, not later than the last day of the month following the half year period. The input service distributor may submit a revised return to correct a mistake or omission within a period of sixty days from the date of submission of the return under sub-rule (10), as the case may be. Rule 14 Rule 15 of CCR, 2004 Provisions relating to recovery of CENVAT credit wrongly taken or erroneously refunded and Confiscation penalty, will be applied for Input Service Distributor (ISD) also. Manner of distribution of Cenvat Credit w.e.f. 1.4.2016 .input service distributor distributes its cenvat credit of service tax paid on input services to: Manufacturing units Units providing output service Outsourced manufacturing unit. The conditions for distributing cenvat credit are as follows: The credit distributed shall not be more than credit of service tax available. When credit is attributable to services used wholly one unit in this case credit shall be distributed wholly to that unit. When credit is attributable to services by more than one unit when credit of service tax is attributable to service used by more than one unit (but not by all the units), the credit shall be distributed on pro rata basis on turnover of such units during the relevant period. The turnover of operational units only must be considered. When credit is attributable to services by all the units when credit of service tax is attributable to service used by all the units, the credit shall be distributed to all the units on pro rata basis on turnover. The turnover of operational units only must be considered. The cenvat credit distributed to outsourced manufacturing unit can be utilized by that outsourced manufacturing unit only, for purposes of payment of duty on goods manufactured for such input service distributor. It is necessary that input service distributor shall maintain separate account for input service credit received from each of the input service distributor concerned. Credit of service tax paid on input services, available with input service distributor as on 31.3.2016, shall not be transferred to outsourced manufacturing unit. Such unit shall be distributed among the units other than outsourced manufacturing unit. Provision of rule 6 does not apply to input service distributor. Rule 6 applies to manufacturing units and service provider. Explanations: unit includes the premises of a provider of output service or the premises of a manufacturer including the factory, whether registered or otherwise or the premises of an outsourced manufacturing unit. The total turnover shall be determined in the same manner as determined under rule 5 : Provided that the turnover of an outsourced manufacturing unit shall be the turnover of goods manufactured by such outsourced manufacturing unit for the input service distributor. the 'relevant period shall be, - (a) if the assessee has turnover in the financial year preceding to the year during which credit is to be distributed for month or quarter, as the case maybe, the said financial year; or; (b) if the assessee does not have turn over for some or all the units in the preceding financial year, the last quarter for which details of turnover of all the units are available, previous to the month or quarter for which credit is to be distributed. outsourced manufacturing unit means a job-worker who is liable to pay duty on the value determined under rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 on the goods manufactured for the input service distributor or a manufacturer who manufactures goods, for the input service distributor under a contract, bearing the brand name of such input service distributor and is liable to pay duty on the value determined under section 4A of the Excise Act. ] Invoice for distribution of credit by input service distributor - The input service distributor should issue a invoice, bill or challan on monthly basis after consolidating the service tax paid on services received during the month.