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2017 (8) TMI 1110 - HC - Central ExciseInterpretation of statute - Rule 2(l) of the Cenvat Credit Rules, 2004 - credit of service tax paid on transportation upto customer s destination from the place of removal - Held that - In the present facts, it is an admitted position before us that the respondent - Assessee had responded to the notices demanding service tax on the basis of interpretation of 2(l) of the Cenvat Credit Rules, 2004 and had not placed any reliance upon the aforesaid CBEC Circular before the Authorities under the Act. It is only now, before us, that the respondents are seeking to rely upon the above CBEC Circular dated 23.08.2008 as it is also adverted to the above decisions referred in the question of law. However, the Revenue did not have any occasion to examine whether or not the conditions precedent provided in the aforesaid Circular of CBEC are satisfied by the Assessee or not to avail of its benefit. We are not deciding the appropriate interpretation of 2(l) of the Cenvat Credit Rules, 2004 in the facts of the present case, as the issue of the applicability of the Circular to the facts is still an unresolved issue - all the issues, both on merits i.e. interpretation of 2(l) Cenvat Credit Rules, 2004 as well as applicability of the CBEC circular are left open for consideration of the Assessing Officer who would pass an appealable order after following the principles of natural justice - matter on remand.
Issues:
Challenge to order of Customs Excise & Service Tax Appellate Tribunal based on reliance on High Court judgments for Cenvat Credit on service tax paid on Goods Transport Service (GTS). Analysis: 1. Challenge to Tribunal's Order: The reference under Section 35G of the Central Excise Act, 1944 contested the Customs Excise & Service Tax Appellate Tribunal's order dated 19th July, 2013. The appeal raised a substantial question of law regarding the Tribunal's reliance on judgments from Karnataka High Court and Gujarat High Court despite a pending Special Leave Petition before the Supreme Court against similar judgments. 2. Interpretation of Cenvat Credit Rules: The respondent, engaged in cement manufacturing, claimed Cenvat Credit on service tax paid on GTS from factory gate to customer's premises. The Tribunal's decision, influenced by High Court judgments, allowed the credit based on Rule 2(l) of the Cenvat Credit Rules, 2004, and Circular No.97/6/2007 by CBEC, emphasizing conditions related to ownership, risk, and freight charges. 3. Applicability of CBEC Circular: The respondent sought to rely on the CBEC Circular post-Tribunal's decision, asserting compliance with its conditions for claiming service tax credit on transportation up to the customer's destination. Discrepancies in the Revenue's examination of these conditions led to the decision to set aside the Tribunal's order for a fresh assessment by the Assessing Officer. 4. Judicial Precedents and Disagreements: Various High Courts, including Karnataka, Gujarat, Punjab, Haryana, and Calcutta, presented differing views on the issue. While some supported the Assessee's position based on Circular relaxation, others disagreed, emphasizing the need for a comprehensive examination of facts and compliance with Circular requirements. 5. Resolution and Future Considerations: The High Court refrained from deciding on the interpretation of Cenvat Credit Rules at the current stage, focusing on the unresolved issue of Circular applicability. All issues, including rule interpretation and Circular relevance, were left open for the Assessing Officer's reconsideration, ensuring adherence to natural justice principles in subsequent proceedings. 6. Conclusion: The appeal was disposed of without costs, with the direction to revisit the matter based on the CBEC Circular's potential application, indicating the importance of thorough assessment and compliance verification in determining Cenvat Credit eligibility for service tax paid on GTS. This detailed analysis of the judgment highlights the key legal aspects, interpretations, precedents, and procedural directions outlined by the High Court in response to the challenges raised regarding Cenvat Credit entitlement based on service tax payments for Goods Transport Service.
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