2016 (9) TMI 134 - AT - Central Excise

Liability - reversal of proportionate CENVAT Credit - service tax paid in respect of GTA service - utilized for transportation of sugar cane - portion of GTA service involved is attributable to sugar cane used for manufacture of bagasse which is in turn is used for generation of electricity - Held that - the issue involved is no more res integra in terms of the decision of the Hon ble Allahabad High Court in the case of Balrampur Chini Mills Ltd Vs UOI 2013 (1) TMI 525 - ALLAHABAD HIGH COURT wherein the Board Circular No. 904/24/2009-CX dated 28/10/2009 requiring reversal of credit or payment of amount in terms of Rule 6 stands quashed. Also this issue has been settled in favour of the assessee in many cases. Therefore, by following the same, the impugned order is set aside. - Decided in favour of appellant

Summary

Issues: Liability to reverse CENVAT Credit on service tax paid for GTA services used in transportation of sugar cane due to sale of electricity generated from bagasse.

The judgment involves an appeal against an Order-in-Appeal partially upholding an order-in-original related to CENVAT credit on service tax paid for GTA services used in transporting sugar cane. The appellants, manufacturers of sugar products, utilized bagasse waste to generate electricity, a portion of which was sold. The Assistant Commissioner demanded the reversal of CENVAT credit on input services wrongly availed for the electricity sold outside. The Commissioner (Appeals) confirmed the order but reduced the penalty. The main issue was whether the appellants were liable to reverse the CENVAT credit due to the electricity sale. The appellant cited precedents like Balrampur Chini Mills Ltd Vs UOI, UOI Vs DSCL Sugar Ltd, Gularia Chini Mills Vs UOI, and CCE Vs Shree Datta SSK Ltd to support their case.

After hearing both parties and reviewing the records, the Tribunal analyzed whether the appellant should reverse the CENVAT Credit taken on service tax for GTA services used in transporting sugar cane because of the electricity sale. The appellant argued that previous court decisions, such as Balrampur Chini Mills Ltd Vs UOI, supported their position by quashing the Board Circular requiring credit reversal. The Tribunal agreed with the appellant, stating that the issue was settled in favor of the assessee in various cases, including UOI Vs DSCL Sugar Ltd, Gularia Chini Mills Vs UOI, and CCE Vs Shree Datta SSK Ltd. Following the precedent set by these cases, the Tribunal ruled in favor of the appellant, setting aside the impugned order and providing consequential relief if necessary.