Rule 7A – Distribution of credit on inputs by the office or any other premises of output service provider :

(1) While rule 7 allows the distribution of credit on input services by the input service distributor, rule 7A allows the distribution of credit on inputs and capital goods by the office or any other premises of output service provider.

(2) Many a times bills / invoices for inputs and capital goods are raised in the name of head office/regional office etc. while the same are received in some other premises of the service provider from where the services are actually provided. In such a case, the head office can distribute the credit of such inputs and capital goods to the service provider by issuing an invoice.

(3) Sub-rule (1) lays down that a provider of output service shall be allowed to take credit on inputs and capital goods received, on the basis of an invoice or a bill or a challan issued by an office or premises of the said provider of output service, which receives invoices, issued in terms of the provisions of the Central Excise Rules, 2002, towards the purchase of inputs and capital goods.

(4) Sub-rule (2) provides that the provisions of these rules or any other rules made under the Central Excise Act, 1944, as made applicable to a first stage dealer or a second stage dealer, shall mutatis mutandis apply to such office or premises of the provider of output service.