2015 (12) TMI 807 - HC - Central Excise

Denial of CENVAT Credit - Whether CESTAT is justified in allowing the Cenvat credit availed by the respondent in respect of service tax paid on Goods Transport Agency Service in respect of outward transportation of the goods beyond the place of removal - Held that - issue pertains to Cenvat credit on outward goods transportation agency service availed by the assessee for transportation of manufactured goods. This issue is covered by the judgment of Division Bench of this Court in case of Commissioner of Central Excise & Customs v. Parth Poly Wooven Pvt. Ltd. Reported in 2011 (4) TMI 975 - GUJARAT HIGH COURT - Decided against Revenue.

Summary

Issues:
Challenge to order passed by CESTAT regarding Cenvat credit on outward goods transportation agency service.

Analysis:
The High Court considered the challenge to the order passed by the CESTAT regarding the Cenvat credit availed by the assessee for outward goods transportation agency service. The main question raised was whether the CESTAT was justified in allowing the Cenvat credit in respect of service tax paid on Goods Transport Agency Service for the outward transportation of goods beyond the place of removal. The issue revolved around the interpretation of the definition of "input service" under the Cenvat Credit Rules, 2004. The judgment referred to a previous Division Bench decision in the case of Commissioner of Central Excise & Customs v. Parth Poly Wooven Pvt. Ltd., where it was held that outward transportation should be considered an input service as per the definition provided. The Court emphasized that the expression "includes" in the definition should not be used to limit the scope of the definition but rather to expand it. The judgment highlighted the legislative intention behind the definition and the importance of considering the entire scope of the definition in determining the eligibility of services for Cenvat credit.

The Court acknowledged that there were certain areas that required clarification, particularly regarding the amendments made to the definition of "input service" post 1.4.08. However, in the cases at hand, the Court held that the outward transport service used by the manufacturer for transporting finished goods from the place of removal up to the premises of the purchaser fell within the ambit of the definition of "input service" under rule 2(l) of the Cenvat Credit Rules, 2004. The judgment emphasized the importance of considering the service utilized in relation to the manufacture of final products or the clearance of final products from the place of removal in determining the eligibility for Cenvat credit. Ultimately, the Tax Appeal was dismissed, affirming the decision of the CESTAT regarding the allowance of Cenvat credit for outward goods transportation agency service.