We have paid Service Tax on transportation for Coal. Coal is one of our Inputs for manuafcturing of Final Product (e.i. Sponge Iron). We have taken CENVAT Credit of the Service Tax. Now the coal is crushed for the manufacturing of fnal product. During the crushing of coal some fines generated , which was unusable and scraped for us and sold without charging any excise duty. Is any excise duty applicable on sale of this scraped sales.
We need your proper guidlines in this respect.
Shyam Bihari Sharma
User ID : ashirwadjsr
Mobile no. 9334021015
Posts / Replies
You seem to have the apprehension that because service tax credit was taken for inward transportation of coal, excise duty is to be paid on the waste coal. This is not correct. Waste coal is not excisable, as it is not manufactured goods. Service tax credit need not be varied because the transportation service was used for bringing the coal, which is a necessary input, and the waste arose out of processes necessary in the factory.
We agreed with the views of our Learned brother.
If the Fine Coal is not the manufactured goods, then the excise duty need not to be paid.
In case of Service Tax Credit, it need to be reversed in case of provision of Exempted Out Put Service.
Agree with learned members 6% of value of Scarp sales of exempted coal fine to be debited against cenvat credit taken on services used for transportation of coal.