2009 (7) TMI 67 - AT - Service Tax

Cenvat Credit Service Tax paid on GT service - whether the services availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2(1)(ii) of CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax paid on the value of such services held yes Decision of Larger Bench followed in the matter of M/s ABB Ltd. vs. C.C.E. & S.T., Bangalore 2009 -TMI - 34139 - CESTAT, BANGALORE

Summary

Issues:
- Denial of Cenvat credit on goods transport agency services from factory gate to place of delivery
- Interpretation of Rule 2(1)(ii) of CENVAT Credit Rules, 2004 regarding outward transportation as an input service

Denial of Cenvat Credit on Goods Transport Agency Services:
The case involved an appeal against the Commissioner (Appeals) order disallowing Cenvat credit on goods transport agency services from the factory gate to the place of delivery. The Tribunal considered the submissions and referred to a previous case for guidance. The Tribunal examined whether services for outward transportation of final products from the place of removal should be considered as an input service under Rule 2(1)(ii) of the CENVAT Credit Rules, 2004. The Tribunal cited a relevant case and concluded that such services should indeed be treated as input services, allowing the manufacturer to claim credit for the service tax paid on the value of these services. Consequently, the Tribunal ruled in favor of the assessee, setting aside the Commissioner (Appeals) order and allowing the appeal with consequential relief.

Interpretation of Rule 2(1)(ii) of CENVAT Credit Rules, 2004:
The Tribunal analyzed the interpretation of Rule 2(1)(ii) of the CENVAT Credit Rules, 2004 concerning whether outward transportation of final products from the place of removal qualifies as an input service. The Tribunal deliberated on whether the manufacturer could claim credit for the service tax paid on such services. Referring to a specific case, the Tribunal held that services for outward transportation should be considered as an input service under Rule 2(1)(ii) of the CENVAT Credit Rules, 2004. This decision favored the assessee, leading to the setting aside of the Commissioner (Appeals) order and granting consequential relief to the appellant.

This judgment clarifies the eligibility of manufacturers to claim Cenvat credit on goods transport agency services for outward transportation of final products from the place of removal. The interpretation of Rule 2(1)(ii) of the CENVAT Credit Rules, 2004 was pivotal in determining that such services qualify as input services, allowing manufacturers to avail credit for the service tax paid on these services. The decision provides guidance on the scope of input services under the CENVAT Credit Rules, 2004 and sets a precedent for similar cases involving the denial of Cenvat credit on transportation services.