service tax
rammohan
(Querist) 23 June 2011
This query is : Open
pls clarify on the following issue:
'X' is authorised service provider for many brands of computers providing service in india. when a customer (buyer of a computer of a particular brand)brings a computer for repair during the warranty period, the service provider replaces the components and does the repair. here the components are supplied on FREE OF COST by the original manufacturer(Y) to 'X'. 'X' imports from Y and pays the customs duties (on the value declared for customs purpose) and also subsequently recovers from 'Y' lateron. 'X' also avails CENVAT credit of CVD+Cess paid while importing the components. 'X' charges service tax only on the service charges from the customer, and the components charges are also not charged from the customer.
here i would like to have clarification on the following aspects:
1. whether CENVAT credit is justified when 'X' is getting reimbursement from 'Y'?
2. as per sec 67 of Finance ACt,whether the cost of free supply components are to be added to the taxable value and charge service tax on the total component+service charge ?
pls provide me the clarification on the above queries.
