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2016 (11) TMI 779 - AT - Central ExciseCENVAT credit - job work - GTA service - benefit of N/N. 214/86 - outward transportation of goods from the place of removal which is their factory - Held that - There is no difference between the inputs and input services credit and the issue being the same i.e. clearance of goods for job work in terms of N/N. 214/86-CE the denial of credit whether it be on inputs or on input services cannot be upheld. As regards the credit in respect of outward transportation I find that the issue is covered by the Hon ble High Court of Karnataka in the case of ABB Ltd 2011 (3) TMI 248 - KARNATAKA HIGH COURT for the period upto 01.04.2008. Thereafter there was an amendment in the definition of input services. The lower authorities would examine the effect of the amendment and would re-decide the issue accordingly for the period after 01.04.2008. As such till the said period the demand raised against the assessee is set aside and for the period subsequent to same is remanded for fresh decision. Appeal allowed - matter on remand - decided partly in favor of appellant.
Issues:
1. Reversal of Cenvat Credit on exempted goods under Notification 214/86-CE. 2. Eligibility for Cenvat credit on outward transportation of goods. Analysis: Issue 1: The Appellants manufactured goods subject to excise duty and exempted goods under Notification 214/86-CE, specifically polyester chips produced on a job-work basis. The Revenue contended that as per Rule 6 of Cenvat Credit Rules, the Appellants must reverse Cenvat Credit corresponding to inputs used in manufacturing exempted goods. Additionally, the Revenue argued against the eligibility of Cenvat credit for outward transportation of goods. Three Show Cause Notices were issued, resulting in duty confirmation and imposition of penalties. The Commissioner (Appeal) upheld the decision, leading to the current appeal by the Appellants. Issue 1 Analysis: The Appellants argued that the exemption under Notification 214/86-CE pertains to intermediate products for use by the principal in manufacturing dutiable goods, allowing them to claim Cenvat credit on inputs used in such intermediate goods. They cited the Sterlite Industries case and a Karnataka High Court decision supporting their position. The Appellants contended that denial of credit, whether on inputs or input services, was unwarranted based on the Larger Bench's ruling. The Tribunal, in the JBF Industries case, supported the Appellants' stance, emphasizing the applicability of the Larger Bench's decision on input services credit for goods sent for job work under Notification 214/86-CE. Consequently, the denial of credit on this ground was deemed inappropriate and set aside. Issue 2: Regarding Cenvat credit for outward transportation of goods, the Appellants relied on a Karnataka High Court ruling until 01-04-2008, before an amendment in the definition of input services. The lower authorities were instructed to re-evaluate the issue post the amendment. The Tribunal acknowledged the High Court's decision and remanded the matter for a fresh decision post the specified date, setting aside the demand against the assessee until that period. In conclusion, the appeal was partly allowed and partly remanded based on the arguments presented and the legal interpretations provided by the Tribunal.
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