2011 (8) TMI 384 - AT - Service Tax

Admissibility of cenvat credit on outward transport services - Impugned period April 2005 to March 2007 - goods transport agency services - 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 - Hence, prior to 01.04.08 when the definition of input service was amended to substitute the words up to the place of removal by from the place of removal, the cenvat credit of service tax paid on outward transportation would be admissible.

Summary

Issues:
1. Admissibility of cenvat credit on outward transportation.
2. Finality of Tribunal's decision in the case of M/s. ABB Ltd.
3. Interpretation of the definition of input service pre and post 01.04.08.

Analysis:

Issue 1: Admissibility of cenvat credit on outward transportation
The respondent had paid service tax towards outward freight and claimed cenvat credit, considering it as their input service. However, proceedings were initiated to deny the credit on the ground that it is admissible only on outward transportation up to the place of removal. The learned Commissioner allowed the appeal, relying on the decision of the Larger Bench of the Tribunal in the case of ABB Ltd., which held that the respondent is eligible for the cenvat credit. The Revenue appealed against this decision.

Issue 2: Finality of Tribunal's decision in the case of M/s. ABB Ltd.
The Revenue contested the decision of the learned Commissioner (Appeals) allowing cenvat credit on outward transportation, arguing that the Tribunal's decision in the case of M/s. ABB Ltd. had not attained finality as the department had appealed before the Hon'ble High Court of Karnataka and obtained a stay against the decision.

Issue 3: Interpretation of the definition of input service pre and post 01.04.08
The Hon'ble High Court of Karnataka, in the tax appeal filed by the Revenue against the decision in the case of ABB Ltd., held that prior to 01.04.08, cenvat credit of service tax paid on outward transportation would be admissible. This interpretation was also supported by the Hon'ble Gujarat High Court in another case. Both High Courts opined that credit would be admissible for outward transport pre-amendment of the definition of input service. As the disputed period in this case falls before 01.04.08, the impugned order allowing the cenvat credit on outward transportation was upheld, and the Revenue's appeal was rejected.

In conclusion, the judgment clarifies the admissibility of cenvat credit on outward transportation, taking into account the interpretation of the definition of input service before and after the relevant amendment date. The decision aligns with the views of the High Courts, affirming the eligibility of the respondent for the cenvat credit in question.