2013 (2) TMI 678 - HC - Central Excise

Denial of CENVAT Credit - Whether respondent can avail Cenvat credit for discharging their service tax liability on the services of transport of goods by road for clearance of final products when the respondent is not provider of output service? If not, then are the respondent liable to reverse the Cenvat credit wrongly availed in the present case - Held that - High Court of Punjab and Haryana in CCE, Chandigarh v. Nahar Industrial Enterprises Limited 2010 (5) TMI 608 - PUNJAB AND HARYANA HIGH COURT ; the High Court of Himachal Pradesh in CCE v. Auro Spinning Mills & Others 2011 (7) TMI 849 - Himachal Pradesh High Court ; the High Court of Delhi in Commissioner of Service Tax v. M/s. Hero Honda Motors Ltd. (2012 (12) TMI 734 - DELHI HIGH COURT) and our High Court in Union of India v. M/s. Mohini Industries (2015 (3) TMI 702 - CHHATTISGARH HIGH COURT) and Union of India v. M/s. Prakriti Industries (2015 (3) TMI 702 - CHHATTISGARH HIGH COURT) have decided the aforesaid question against the department. - Decided against Revenue.

Summary

Issues:
1. Whether the respondent can avail Cenvat credit for discharging their service tax liability on the services of transport of goods by road for clearance of final products when the respondent is not the provider of output service?
2. Are the respondents liable to reverse the Cenvat credit wrongly availed in the present case?

Analysis:

Issue 1:
The case involved appeals where the manufacturer and service provider were the same, acting as manufacturers and transport service providers. The assessees used their own transport service for transporting raw materials. They discharged their service tax liability through Cenvat credit account. The department questioned whether the respondents could avail Cenvat credit for service tax liability when they were not the output service provider. The High Court referred to various decisions by other High Courts, including Punjab and Haryana, Himachal Pradesh, Delhi, and their own, where similar questions were decided against the department. The Court, based on the reasoning in those decisions, dismissed the appeals.

Issue 2:
The second issue revolved around whether the respondents were liable to reverse the Cenvat credit wrongly availed in the present case. The appeals filed by the department were dismissed based on the decisions in previous cases where similar issues were addressed. The Court upheld the decisions made in those cases and consequently dismissed the appeals before them.

In conclusion, the High Court of Chhattisgarh dismissed the appeals filed by the department based on the decisions in previous cases where similar issues were addressed and decided against the department. The Court upheld that the respondents could avail Cenvat credit for discharging their service tax liability on transport services even if they were not the output service provider.