2006 (12) TMI 376 - AT - Central Excise

Summary

Issues involved: Availment of Cenvat credit on Service Tax paid on goods transport agency service for outward transportation of goods.

Summary:
In the present case, the applicant availed Cenvat credit on Service Tax paid on the service of goods transport agency for outward transportation of goods from January 2005 to September 2005. The lower authorities contended that since the finished goods were cleared from the factory on payment of duty, the 'Place of removal' as per Section 4(3)(c)(i) of the Central Excise Act, 1944 would be at the 'factory gate'. Consequently, the service of the goods transport agency for transportation of finished goods beyond the factory gate did not qualify as an input service under Rule 2(l) of the Cenvat Credit Rules, 2004, leading to the denial of Cenvat credit on the service tax paid for transportation beyond the factory gate.

The advocate representing the applicant referred to previous cases where Cenvat credit was allowed on similar issues by the Commissioner of Central Excise & Customs (Appeals) and this Tribunal. The advocate argued that the transportation of finished goods to customers' premises falls under the definition of 'input services' as per Rule 2(l) of the Cenvat Credit Rules, 2004. Based on this, the Tribunal found merit in the applicant's case and granted a waiver of pre-deposit of service tax and penalty during the appeal process, citing a strong prima facie case made by the applicant.

After hearing both parties and examining the records, the Tribunal acknowledged the advocate's arguments and granted the applicant's request for a stay on the recovery of service tax and penalty during the pendency of the appeal. Consequently, the stay application was allowed, and the recovery of service tax and penalty was stayed.

*(Pronounced in the open Court)*