2011 (9) TMI 815 - AT - Service Tax

Waiver of pre-deposit - CENVAT credit on Service Tax paid on GTA service utilized for transport of the cigarettes from the factory gate to the warehouses - Board s Circular dated 2.2.2006 may be of any help in the present case as both related to the period prior to 1.4.2008 i.e. before the amendment introduced to Rule 2(l) of the CENVAT Credit Rules 2004. However Commissioner (Appeals) for the subsequent period has allowed the credit in identical circumstances. pre-deposit waived

Summary

Issues:

1. Eligibility of CENVAT credit on Service Tax paid on GTA service for transport of goods to warehouses.
2. Interpretation of "place of removal" for availing CENVAT credit.
3. Applicability of Board's Circular on eligibility of credit.
4. Comparison of decisions by the Hon'ble High Court and Commissioner (Appeals) for different periods.

Analysis:

1. The case involved a manufacturer of Cigarettes seeking CENVAT credit on Service Tax paid for GTA service used to transport cigarettes to warehouses. The Original authority denied the credit, stating that goods were removed from the factory gate, which was considered the "place of removal," and duty was paid at that point, making the GTA service ineligible as an 'input service.'

2. The applicant argued, citing a Board's Circular, that credit for service tax on transportation up to the depot should be allowed, regardless of whether goods are subject to specific or ad valorem excise duty rates. They also referenced a decision by the Hon'ble High Court of Karnataka and a subsequent decision by the Commissioner (Appeals) in their own case, where credit was allowed based on the Board's Circular.

3. The Tribunal noted that the High Court's decision and the Board's Circular were not directly applicable to the case due to the amendment to Rule 2(l) of the CENVAT Credit Rules, 2004, post the relevant period. However, the Tribunal found that the Commissioner (Appeals) had allowed similar credits in comparable circumstances for a subsequent period, leading to a favorable decision for the applicant.

4. Considering the above analysis, the Tribunal decided to waive the pre-deposit of dues as per the impugned order and stayed the recovery until the appeal's final disposal. This decision was made based on the findings regarding the eligibility of CENVAT credit on the GTA service for transporting goods to warehouses, as per the specific circumstances and precedents discussed during the hearing.