2016 (5) TMI 1283 - AT - Central Excise

Cenvat credit - service tax suffered for transporting the goods cleared by the appellant to its sister unit - credit ought to have been taken by the sister unit instead of the appellant unit - Held that - When liability is incurred by the appellant then there is no law to deny the genuine liability incurred to be allowed as CENVAT credit under reverse charge mechanism, there is no question of depriving the appellant from the CENVAT Credit of the service tax paid on the outward transportation. Revenue has misconceived the scheme of taxation. Reverse charge mechanism is quite different from the normal taxation under this scheme, the service suffering tax entitles the recipient thereof to take credit of tax so suffered. Therefore, there cannot be denial of the benefit to the appellant according to such scheme of taxation. - Decided in favour of appellant

Summary

The dispute was about whether the appellant could claim CENVAT credit for service tax paid on transporting goods to its sister unit. The Revenue argued that the credit should have been taken by the sister unit. The Tribunal ruled in favor of the appellant, stating that under the reverse charge mechanism, the appellant was entitled to the credit. The appeal was allowed.