2017 (4) TMI 983 - AT - Central Excise

CENVAT credit - GTA Service in respect of outward transportation of the goods beyond the place of removal - Held that - the issue herein have been considered in detail by Hon ble Gujarat High Court in the case of Commissioner of Central Excise Vs Philips Carbon Black Ltd. 2016 (2) TMI 20 - GUJARAT HIGH COURT , where it was held that outward transport service used by the manufactures for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of input service provided in rule 2(l) of CCR - credit allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant-assessee rightly took Cenvat credit on Goods Transport Agency Service (GTA) for outward transportation of goods beyond the place of removal.

Analysis:
In the appeals filed by the appellants, who are manufacturers of pipes and tubes of steel falling under Chapter 73 of the GTA and availing the Cenvat credit facility, the central issue pertains to the correctness of taking Cenvat credit on GTA service for outward transportation of goods beyond the place of removal. The period in dispute in all three appeals is before 01/04/2008, prior to the amendment in the definition in Rule 2(l) of CCR, 2004. The critical question is whether the appellants have rightly availed Cenvat credit on GTA service for transportation beyond the place of removal.

The tribunal noted that the issue at hand has been extensively deliberated upon by the Hon’ble Gujarat High Court in the case of Commissioner of Central Excise Vs Philips Carbon Black Ltd. The High Court, in its decision, favored the assessee by interpreting the definition of “input service” in Rule 2(l) of the Cenvat Credit Rules, 2004. The High Court opined that outward transport service used by the manufacturer for transporting finished goods from the place of removal up to the purchaser's premises falls within the ambit of “input service.” This interpretation aligns with the legislative intent behind the definition and supports the inclusion of outward transportation up to the place of removal within the scope of Cenvat credit eligibility.

Based on the legal reasoning provided by the Hon’ble High Court, the tribunal allowed the appeals filed by the appellants and set aside the impugned orders. Consequently, the appellants are entitled to consequential benefits as per the law. This decision underscores the significance of a broad interpretation of input services to facilitate the smooth functioning of the credit mechanism for manufacturers availing Cenvat credit, thereby ensuring compliance with the statutory provisions governing Cenvat credit eligibility.