2016 (9) TMI 330 - HC - Service Tax

Availability of CENVAT credit availability of refund - Rule 5 of the Cenvat Credit Rules, 2004 GTA services - Whether the goods cleared at the factory gate, depot or any other place of removal and delivered at the port of export shall entitle the appellants to the Cenvat credit of the service tax paid on transportation of such goods from any of the above places or such tax refundable under Rule 5 of the Cenvat Credit Rules, 2004 wherever the Cenvat credit is not adjustable? - Whether Cenvat Credit is admissible in respect of service tax paid on transportation of the goods cleared from the places in question? Held that - the appellant is only a recipient of services and that there is no sale, but only transfer to its own units. The consent of the appellant recorded and further decision is to be taken by the adjudicating authority - the Original Authority has to frame proper issues, adjudicate by providing an opportunity of hearing as contemplated under the Central Excise Act 1944 and the Rules framed thereunder and pass appropriate orders on merits, within a period of two months from the date of receipt of a copy of this order matter disposed off.

Summary

Issues:
1. Denial of Cenvat credit on service tax paid on Goods Transport Agency services.
2. Admissibility of Cenvat Credit on service tax paid on transportation of goods.
3. Availability of credit on service tax paid on transportation charges from factory to own factories.
4. Denial of input service tax credit paid on input services.
5. Denial of service tax paid on inward transportation of goods from one factory to another factory of the same manufacturer.

Analysis:
1. The appellant was denied Cenvat credit on service tax paid on Goods Transport Agency services following a joint adjudication, leading to an order dated 15.03.2011. The appeal to the Commissioner (Appeals) was rejected, and a further appeal was made to CESTAT, Chennai.

2. Before CESTAT, Chennai, the appellant raised two critical questions regarding the entitlement to Cenvat credit on service tax paid on transportation of goods cleared from specific locations. The Tribunal answered these questions and remanded the matters back to the Original Authority for further adjudication.

3. The appellant challenged the final order of CESTAT, specifically questioning the sustainability of the order concerning the availability of credit on service tax paid on transportation charges from the factory to its own factories in different states. The Court directed the adjudicating authority to decide on this issue within two months, considering the Tribunal's order and providing an opportunity for a hearing.

4. The Court examined the grounds for appeal, focusing on the argument that the appellant was merely a recipient of services with no sale involved, only transfer to its own units. It was decided that the issue of availing Cenvat credit on service tax paid on transportation charges from the appellant's factory to its other units should be determined by the adjudicating authority, with proper issues framed and adjudicated within the specified timeframe.

5. Ultimately, the Civil Miscellaneous Appeal was disposed of, emphasizing the need for the adjudicating authority to decide the matter on merits, considering the Tribunal's order and applicable laws. The Court highlighted the importance of providing a fair opportunity for a hearing and passing appropriate orders in accordance with the law.