Availment of Cenvat credit, Central Excise

[mrk fast]

X company received inputs from Y company[100%EOU]and took cenvat credit of CVD [BED-14%]and Education Cess and SHE Cess. But some of the manufacturers say that X company can avail Cenvat credit as per the formula mentioned in Rule 3(7) of the  Cenvat Credit Rules i.e X multiplied by [(1+BCD/400) Multiplied by (CVD/100)] and no credit on Education cess or SHE cess is allowed as Cenvat credit eventhough the 100% EOU has paid the same. I request the members of the forum to give their opinion on this matter.

Posts / Replies

[Surender Gupta]

The formula given in the rule 3(7) is in line with exemption notifications and applicable to basic excise duty only. Therefore despite the fact that there is no reference to education cess in the rule 3(7), X can avail the credit of education cess paid by Y (an EOU), and moreover, without applying any formula.

[R.S. Mangal]

the credit is to be taken as per the formula mentioned in Rule 3(7) of the Cenvat Credit Rules. however there are tribunal decisions holding that credit of EC and HEC can be taken in full.