2016 (6) TMI 197 - AT - Central Excise

Cenvat credit on service tax payment on GTA service - denial of claim on the ground that as per Rule 2(l) of Cenvat Credit Rules 2004, the credit can be availed only on the input service which is used by the manufacturer in or in relation to the manufacture of final products and clearance thereof upto place of removal - Held that - There is no dispute that the appellant have paid the service tax on GTA service, which was pdrformed for transportation of goods from their Allahabad unit to Kalher depot. Therefore in my view the service tax paid in respect of certain service even if service was undertaken other than the appellants factory, the credit can be availed at any one place Even if the service tax is not required to be paid and if the assessee pay the service tax, the same can be taken as Cenvat Credit. In the present case, since on the GTA service their Allahabad unit has already paid the service tax, the appellant was not required to pay the service tax once again therefore the service tax paid by the appellant is admissible as Cenvat Credit to the appellant. Thus the appellant is entitled for the Cenvat Credit. - Decided in favour of assessee

Summary

Issues:
- Appeal against denial of Cenvat Credit on service tax paid for transportation of goods between units.

Analysis:
1. The appellant appealed against the denial of Cenvat Credit by the Commissioner (Appeals) for paying service tax on goods transport from Allahabad to Kalher unit and claiming credit in the Bhiwandi unit. The authorities rejected the credit citing Rule 2(l) of Cenvat Credit Rules 2004, stating credit can only be availed for input services used in manufacturing final products or clearance. The appellant argued that since they paid the service tax, credit should be allowed. They contended that activities between units are internal, making the appellant both service provider and recipient, hence credit is admissible.

2. The appellant's counsel relied on judgments like Bajaj Allianz General Insurance Co. Ltd. and others to support their claim that even if no service is involved or if service tax is erroneously paid, the excess tax paid can be claimed as Cenvat Credit. On the other hand, the Revenue argued that the service tax on GTA service was not received by the appellant, thus not meeting the criteria for input service as defined in the Cenvat Credit Rules.

3. The Member (Judicial) analyzed the arguments and cited the judgments referred by the appellant's counsel to support the appellant's entitlement to Cenvat Credit. Referring to cases like Bajaj Allianz and Sterlite Industries, the Member concluded that even if the service tax was not required to be paid, if paid, it can be claimed as credit. The Member emphasized that since the service tax was already paid by the Allahabad unit, the appellant was not obligated to pay it again, making the credit admissible.

4. Consequently, the Member set aside the impugned order and allowed the appeal in favor of the appellant. The judgment highlighted that the appellant's payment of service tax, even if not mandatory, entitles them to claim Cenvat Credit. The decision was pronounced on 25/04/2016.