2011 (12) TMI 445 - AT - Central Excise

CENVAT credit of service tax paid on various input services - Cenvat credit availed on Service Tax paid on GTA service from factory to buyer s premises - revenue contends that Service Tax paid on transport cost is permissible as Cenvat credit only if the transportation is done up to the place of removal. Buyer s premise is not the place of removal but that is place of delivery - Held that - Service extends to the stage of handing over the goods to the customers for whom it is meant and therefore, any service tax paid upto that point, is to be taken into consideration while granting the CENVAT benefit and therefore no illegality in the impugned orders, which calls for interference - Following decision of C.C.E. & S.T, Belgaum v. Vasavadatta Cements Ltd. 2010 (9) TMI 865 - KARNATAKA HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of input credit for service tax paid on transportation charges to buyer's premises.
2. Interpretation of "place of removal" under Cenvat Credit Rules, 2004.
3. Admissibility of Cenvat credit for transportation from depot to buyer's premises.
4. Applicability of service tax on transportation from depot to buyer's premises.
5. Comparison of transportation from factory to buyer's premises with transportation from depot to buyer's premises.
6. Judicial precedent on Cenvat benefit for transportation services.
7. Reversal of the first appellate order disallowing Cenvat credit.

Analysis:
1. The case involved a dispute regarding the disallowance of input credit amounting to Rs. 41,100 for service tax paid on transportation charges to the buyer's premises. The appellant argued that if credit for transportation from the factory to the buyer's premises was allowed, there was no reason to disallow credit for transportation from the depot to the buyer's premises.

2. The disagreement centered on the interpretation of the term "place of removal" under the Cenvat Credit Rules, 2004. The Revenue contended that the buyer's premises did not qualify as the place of removal but rather as the place of delivery, citing the definition in Section 4(3)(c) of the Central Excise Act, 1944.

3. The appellant relied on a judgment by the Hon'ble High Court of Karnataka in a similar case to argue that any service tax paid on transportation up to the point of delivering goods to the customer should be considered for Cenvat benefit. The appellant emphasized that the delivery point, whether the factory or the depot, should be eligible for credit.

4. The Tribunal considered the legislative intent behind the Finance Act, 1994, which taxes economic activities like transportation. The Tribunal noted that denying service tax credit for transportation from depot to buyer's premises would contradict the purpose of avoiding cascading effects through Cenvat Credit Rules, 2004.

5. Referring to the judgment of the Hon'ble High Court of Karnataka, the Tribunal highlighted that services extended up to handing over goods to customers should be considered for Cenvat benefit. The Tribunal disagreed with the Revenue's interpretation and reversed the first appellate order disallowing the Cenvat credit of Rs. 41,100.

In conclusion, the Tribunal allowed the appeal, emphasizing the importance of considering transportation services up to the point of delivery to the customer for Cenvat benefit, contrary to the Revenue's argument based on the definition of "place of removal."