2011 (7) TMI 908 - AT - Central Excise

CENVAT credit - GTA services - Rule 3 read with Rule 2(k) of CENVAT Credit Rules, 2004 - The Larger Bench of the Tribunal in the case of ABB Ltd. Vs. Commissioner of Central Excise, Bangalore (2009 -TMI - 34139 - CESTAT, BANGALORE) has held that the services availed by a manufacturer for outward transportation of final products from the place of removal shall be treated as input services in terms of Rule 2(l)(ii) of Cenvat Credit Rules, 2004 - Decided in favor of the assessee

Summary

Issues: Appeal against order-in-appeal setting aside lower adjudicating authority's decision on CENVAT credit for service tax paid on outward transportation of finished goods.

Analysis:
1. Issue: Entitlement to CENVAT credit on service tax paid on outward transportation.
- Summary: The respondent availed CENVAT credit on service tax paid on outward transportation of finished goods. The department alleged that the respondent was not entitled to such credit under Rule 3 read with Rule 2(k) of CENVAT Credit Rules, 2004.
- Judgment: The lower adjudicating authority dropped demands related to exports and excise duty paid on assessable value inclusive of freight charges. However, the authority confirmed a certain amount along with interest and imposed a penalty. The respondent challenged this decision, leading to the Commissioner (Appeals) setting aside the lower authority's order. The Revenue then appealed this decision.

2. Issue: Interpretation of Rule 3 of the CENVAT Credit Rules, 2004.
- Summary: The contention was that the respondent contravened Rule 3 by availing CENVAT credit on service tax paid on outward transportation, which was argued to not qualify as an 'input service' under Rule 2(k) of the CENVAT Credit Rules, 2004.
- Judgment: The learned JDR argued for setting aside the impugned order and allowing the appeal based on the alleged contravention of Rule 3. However, the Tribunal referred to a decision by the Larger Bench in ABB Ltd. Vs. Commissioner of Central Excise, Bangalore, which held that services for outward transportation of final products qualify as input services. The Tribunal also cited a decision by the Karnataka High Court affirming the Tribunal's decision. As the period in question was before the relevant rule amendment, the Tribunal upheld the impugned order and dismissed the Revenue's appeal.

In conclusion, the Tribunal upheld the order-in-appeal setting aside the lower adjudicating authority's decision regarding the entitlement to CENVAT credit on service tax paid on outward transportation of finished goods, based on the interpretation of relevant rules and precedents.