2011 (8) TMI 378 - AT - Service Tax

Admissibility of cenvat credit on outward transport services prior to 01.04.08 - In the decision of the Larger Bench of the Tribunal in the case of ABB Ltd. & Ors. 2009 -TMI - 34139 - CESTAT, BANGALORE held that respondent is eligible for the cenvat credit - Held that credit would be admissible in respect of outward transport for the period prior to 01.04.08 when the definition was amended and in view of the fact that in this case the period of dispute is prior to 01.04.08, the impugned order has to be upheld and appeal filed by the Revenue has to be rejected.

Summary

Issues:
1. Admissibility of cenvat credit on outward transport services prior to 01.04.08.

Analysis:
The appeals were filed by the Revenue against the decision of the Commissioner (Appeals) regarding the admissibility of cenvat credit on outward transport services prior to 01.04.08. The Respondent had paid service tax for outward freight from July 2006 to March 2007 and claimed cenvat credit, considering it as their input service. However, the Revenue contended that cenvat credit is only admissible on outward transportation up to the place of removal. The Commissioner allowed the appeal, relying on the decision of the Larger Bench of the Tribunal in the case of ABB Ltd., which held the respondent eligible for the cenvat credit. The Revenue appealed against this decision.

The Revenue also appealed against the decision of the Commissioner (Appeals) allowing cenvat credit to the respondents on outward transportation. The Revenue argued that the Tribunal's decision in the case of M/s. ABB Ltd. was not final as an appeal was filed before the Hon'ble High Court of Karnataka, which granted a stay against the decision.

The Hon'ble High Court of Karnataka's decision on the tax appeal filed by the Revenue against the ABB Ltd. case clarified that prior to 01.04.08, cenvat credit of service tax paid on outward transportation was admissible. The Hon'ble Gujarat High Court in the case of Parth Poly Wooven Pvt. Ltd. also supported this view. Both High Courts concluded that credit would be admissible for outward transport before the amendment of the definition of input service on 01.04.08. Since the period in question in this case was before the amendment, the impugned order was upheld, and the Revenue's appeal was rejected.

In conclusion, the Appellate Tribunal CESTAT, Ahmedabad, under the leadership of Hon'ble Mr. B.S.V. Murthy, Member (Technical), dismissed the Revenue's appeals, affirming the admissibility of cenvat credit on outward transport services prior to 01.04.08 based on the decisions of the Hon'ble High Courts of Karnataka and Gujarat.