2015 (2) TMI 238 - AT - Service Tax

CENVAT Credit on GTA services - Clearance of final products from the place of removal- Appellants did not show any documents evidencing that clearances were made on FOR basis and therefore the factory gate becomes the place of removal - whether the service tax paid on input service as defined in Rule 2(l) of Cenvat Credit Rules, 2004 would be eligible for cenvat credit accordingly - Held that - Before amendment dated 1-4-2008, services used for clearance of final products from the place of removal is covered in input service, hence credit will be allowed. W.e.f. 1-04-2008, services used upto the place of removal will be covered in input service definition. The matter stands decided by Hon ble Karnataka High Court in the case of CCE, Bangalore vs. ABB Ltd- 2011 (3) TMI 248 - KARNATAKA HIGH COURT - It is held that the appellants are eligible for cenvat credit - Decided in favour of assessee.

Summary

Issues:
Appeal against disallowance of cenvat credit on GTA service due to lack of evidence for clearances made on FOR basis.

Analysis:
The appellants contested the disallowance of cenvat credit amounting to Rs. 9,41,035 for service tax paid on GTA service during a specific period. The denial was based on the assertion that the appellants failed to provide documentation proving clearances were made on FOR basis, making the factory gate the place of removal. The Commissioner (Appeals) upheld the rejection citing a relevant circular. The main contention revolved around the interpretation of input service under Rule 2(l) of Cenvat Credit Rules, 2004, which includes services used for clearance of final products from the place of removal. The appellant's counsel argued that services used for clearance till the destination fall within this definition, supported by a precedent involving CCE, Bangalore vs. ABB Ltd.

The appellate tribunal considered both parties' arguments and focused on whether service tax paid on input service, as defined in the rules, qualifies for cenvat credit. Referring to the definition of input service, which explicitly covers services used for clearance of final products from the place of removal, the tribunal cited a Karnataka High Court decision to support the interpretation. The court emphasized that the phrase "activities relating to business" should not be expansively interpreted beyond the legislative intent, especially concerning transportation of final products. The court highlighted a subsequent amendment that clarified the inclusion of transportation charges for clearance of final products till the destination. Consequently, the tribunal ruled in favor of the appellants, holding them eligible for cenvat credit.

In conclusion, the tribunal allowed the appeal, emphasizing the legislative intent behind the definition of input service and the specific inclusion of services related to the clearance of final products from the place of removal. The judgment clarified the scope of eligible services for cenvat credit, aligning with the legal provisions and precedents cited during the proceedings.