2014 (12) TMI 117 - AT - Service Tax

CENVAT Credit - GTA - input services - Revenue is of the view that the shortage has occurred of inputs, consequently the input service credit was denied to the appellant - Held that - There is no dispute on account of availment of CENVAT credit on inputs. When there is no dispute regarding receipt of inputs, therefore, whatever transportation has been paid by the appellant on Inward Transportation Service are entitled for input service credit. Further, the measurement Tolerance is on account of receipt of inputs and supply of finished goods. In these terms, it cannot be said the appellants have received the input in short quantity. Therefore, service tax on inward transportation is entitled as input service. Appellants have rightly taken the CENVAT credit on input service on Inward Transportation Service. Accordingly, impugned orders are set aside - Decided in favour of assessee.

Summary

Issues involved:
Denial of CENVAT credit on Inward Transportation Service.

Analysis:
The appellants appealed against the denial of CENVAT credit from input service, specifically Inward Transportation Service. The issue was common in both cases, so the appeals were consolidated. The appellant procured gas from Gas Authority of India Ltd. (GAIL) through pipelines and supplied it to consumers. They claimed CENVAT credit on inputs for Inward Transportation Service but faced denial of credit due to a shortage of gas lost during supply. The Revenue contended that this shortage of inputs led to the denial of input service credit. The appellant argued that the denial was unwarranted as the Measurement Tolerance accounted for any losses during the manufacturing process, and therefore, CENVAT credit should not be denied. The impugned orders were challenged on this basis.

The appellant's counsel emphasized that while shortages were acknowledged, the denial of input service credit for transportation of these inputs was unjustified. They argued that the Measurement Tolerance covered losses during the manufacturing process, making the denial of CENVAT credit inappropriate. On the contrary, the Revenue reiterated the findings in the impugned orders, leading to a dispute that required resolution.

After hearing both parties and considering their submissions, it was established that there was no dispute regarding the availment of CENVAT credit on inputs. Since there was no disagreement about the receipt of inputs, the transportation costs incurred by the appellant for Inward Transportation Service were deemed eligible for input service credit. The Measurement Tolerance accounted for losses during the receipt of inputs and supply of finished goods, ensuring that the appellants did not receive the inputs in short quantity. Consequently, the service tax on inward transportation was considered eligible as input service.

In conclusion, the judgment held that the appellants rightfully claimed CENVAT credit on input service for Inward Transportation Service. As a result, the impugned orders were set aside, and the appeals were allowed with any necessary consequential relief.