2018 (6) TMI 1653 - AT - Central Excise

CENVAT credit - input services - outward transportation service - Place of removal - penalty - HELD THAT - The issue of availability of Cenvat credit post 1-4-2008 has been settled by the Hon ble Supreme Court in appellant s own case 2018 (2) TMI 117 - SUPREME COURT that the assessee is not entitled to avail Cenvat credit on outward transportation service - the appellant is not entitled to avail Cenvat credit on outward transportation charges although the same form part of value of the finished goods. Therefore, the Cenvat credit availed by the appellant is denied. Penalty - HELD THAT - Admittedly, there were divergent views during the impugned period, in that circumstance, no penalty is imposable on the appellant - the penalty is dropped. Appeal allowed in part.

Summary

Issues:
Availability of Cenvat credit on outward transportation service post 1-4-2008.

Analysis:
The appellant, a cement manufacturer, appealed against the denial of Cenvat credit on outward transportation service. The appellant contended that they clear goods on FOR basis, with transportation cost included in the assessable value, thus claiming entitlement to Cenvat credit. Citing precedents, the appellant argued that such expenses qualify as business expenditure in manufacturing activity. However, the Ld. AR argued that the Hon’ble Supreme Court ruling in Ultratech Cement Ltd. case post 1-4-2008 established that Cenvat credit is not available for outward transportation beyond the place of removal to buyer’s premises.

Upon hearing both parties and considering their submissions, the Tribunal noted the settled issue post 1-4-2008, as per the Hon’ble Supreme Court’s ruling in Ultratech Cement Ltd. case, that the appellant is not entitled to Cenvat credit on outward transportation service. Consequently, the Tribunal held that the appellant cannot avail Cenvat credit on outward transportation charges, even if they are part of the finished goods' value. Notably, due to conflicting views during the relevant period, the Tribunal decided not to impose a penalty on the appellant.

In the final order, the Tribunal directed the appellant to pay the denied Cenvat credit along with interest, while setting aside the penalty. The appeal was disposed of accordingly, with the Tribunal emphasizing the settled legal position restricting Cenvat credit availability on outward transportation post 1-4-2008.