2011 (7) TMI 922 - AT - Service Tax

CENVAT credit - Outward Freight charges - The department initiated proceedings against the appellant on the ground that the credit on service tax paid on outward freight for transportation of finished goods from place of removal is not admissible - the period involved in this case is January, 05 to July, 07. 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 - Appeal is allowed

Summary

Issues:
1. Denial of CENVAT credit on service tax paid on outward freight charges.

Analysis:
The appellant, engaged in manufacturing goods, appealed against the denial of CENVAT credit on service tax paid on outward freight charges. The dispute arose when the department challenged the credit availed by the appellant on the grounds of inadmissibility. The lower adjudicating authority upheld the denial, leading to the appellant's appeal before the Commissioner (Appeals), who also ruled against the appellant, prompting the current appeal.

The key contention revolved around the admissibility of CENVAT credit on service tax paid on outward freight charges for transporting finished goods from the 'place of removal.' Both the appellant and the JDR referenced a judgment by the Hon'ble High Court of Karnataka in the case of Commissioner of Central Excise, Bangalore Vs. ABB Ltd., which allowed such credit for the period before an amendment effective from 01.04.2008.

Upon careful consideration of submissions and records, the Tribunal noted that the period under consideration in this case was from January 2005 to July 2007. Referring to a decision by the Larger Bench of the Tribunal in the case of ABB Ltd. Vs. Commissioner of Central Excise, Bangalore, the Tribunal held that services for outward transportation of final products from the place of removal qualify as input services under Rule 2(l)(ii) of the Cenvat Credit Rules, 2004. The Tribunal further highlighted that the judgment by the Hon'ble Karnataka High Court in the ABB Ltd. case supported the admissibility of credit for the period preceding the 01.04.2008 rule amendment.

Consequently, the Tribunal set aside the impugned order and allowed the appeal, aligning with the precedent established in the ABB Ltd. case and the interpretation of relevant rules and judgments applicable to the period in question.