2011 (7) TMI 916 - AT - Central Excise

Demand - CENVAT credit - The contention of the appellant is that CENVAT credit was availed on outward transportation of the goods to customer premises and it is an activity relating to business and therefore credit cannot be denied - 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:
- Admissibility of CENVAT credit on outward transportation
- Interpretation of 'input services' under Cenvat Credit Rules, 2004
- Applicability of judicial decisions on similar cases

Admissibility of CENVAT credit on outward transportation:
The appellant filed appeals against Orders-in-Appeal confirming the demand of inadmissible CENVAT credit. The appellant contended that the credit on outward transportation to customer premises is a business-related activity and should not be denied. The appellant relied on the definition of 'input services' under Rule 2(l)(ii) of Cenvat Credit Rules, 2004, and cited a decision of the Hon'ble Karnataka High Court in the case of ABB Ltd. Vs. Commissioner of Central Excise to support their claim.

Interpretation of 'input services' under Cenvat Credit Rules, 2004:
The appellant argued that the outward transport service qualifies as an input service, especially considering the period involved in the case, which was before the amendment of the definition of 'input service' on 01.04.2008. The learned JDR reiterated the findings of the lower authorities, upholding the demand for inadmissible credit along with interest and penalty.

Applicability of judicial decisions on similar cases:
After reviewing the submissions and case records, the Tribunal referred to a decision of the Larger Bench in the case of ABB Ltd. Vs. Commissioner of Central Excise, Bangalore, which held that services for outward transportation of final products qualify as input services under Rule 2(l)(ii) of Cenvat Credit Rules, 2004. The Tribunal also noted the decision of the Hon'ble Karnataka High Court, affirming the applicability of the Larger Bench's decision to cases before the amendment of the rule in question. Consequently, the Tribunal set aside the impugned orders, allowing the appeals.

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