SERVICE PROVIDERS HIT BY 4% CVD ON IMPORTS

The Budget 2007-08 has kept the Countervailing Duty (CVD) on imports in lieu of State Vat not cenvatable against service tax liability. This is in equitous as Cenvat credit for the CVD is available for the manufacturing industry against its excise liability. But there is no unanimous view on this among analysts. A section of them believes that since the output service is not subject to State Vat, the 4% CVD should not be cenvatable against service tax.