Accumulated Balance of Credit in CENVAT account as on 1st April, 2008:

• As you are aware, from 1st April, 2008 Rule 6(3) of CENVAT credit Rules, 2004 has been
Amended.

• The service Provider providing taxable as well as exempted service and not maintaining
Separate account.

o can either opt to pay amount equal to 8% on value of exempted service

O or pay proportionate input service in the ratio of exempted turnover to total turnover

o Earlier it was restricted to the extend of 20% of Service tax payable.

• A question was raised before CBEC about the utilization of credit available as on 1st April,
2008 i.e. balance accumulated under old method. Can this balance be utilized under new
Method.

• CBEC vide letter No. 137/72/2008-CX.4 Dated: November 21, 2008 clarified that “As no
Lapsing provision was incorporated and that the existing Rule 6(3) of the CENVAT Credit
Rules does not explicitly bar the utilization of the accumulated credit, the department
Should not deny the utilization of such accumulated CENVAT credit by the taxpayer after
01/04/2008. Further, it must be kept in mind that taking of credit and its utilization is a
Substantive right of a taxpayer under value added taxation scheme. Therefore, in the
Absence of a clear legal prohibition, this right cannot be denied.”