2018 (2) TMI 548 - AT - Central Excise

CENVAT credit - input services - Outward Transportation - Repair and Maintenance of compressor maintained at daughter station - Held that - in terms of the decision of the Tribunal in the case of Lafarge India Pvt Ltd 2017 (1) TMI 1069 - CESTAT NEW DELHI the appellant is entitled to avail the credit on Outward Transportation Service upto the daughter station as the place of removal - credit allowed. Repair and Maintenance of compressors at daughter station - Held that - without maintaining a particular pressure of gas at daughter station, the gas cannot be sold. When the gas cannot be sold, the appellant cannot run their manufacturing activity, therefore, the appellant is entitled to avail Cenvat Credit on Repair and Maintenance Service of compressors at daughter station - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of Cenvat Credit on 'Outward Transportation' and 'Repair and Maintenance' of compressors at daughter station.

Analysis:
The appellant, a public sector undertaking manufacturing petroleum products, appealed against the denial of Cenvat Credit on transportation of gas to daughter station and repair and maintenance of compressors at the daughter station. The Revenue contended that the appellant was not entitled to credit for transportation beyond the place of removal and for repair and maintenance services. The appellant argued that they should be allowed credit as they bear the cost of transportation to the daughter station and are duty-bound to maintain compressors at the daughter station.

The appellant justified their entitlement to Cenvat Credit on 'Outward Transportation Service' by pointing out that the transportation cost to the daughter station was included in the excisable value of goods sold at the daughter station. They relied on the decision in the case of Lafarge India Pvt Ltd to support their claim. The appellant also argued that maintaining compressors at the daughter station was crucial for selling gas to customers and, therefore, the 'Repair and Maintenance Service' of compressors at the daughter station should be considered an Input Service, citing the decision in the case of Parry Engg & Electronics P Ltd.

After hearing both parties, the judge found in favor of the appellant. It was held that the appellant was entitled to Cenvat Credit on 'Outward Transportation Service' up to the daughter station as it was considered the place of removal. Additionally, the judge ruled that the appellant could claim credit for 'Repair and Maintenance Service' of compressors at the daughter station since maintaining proper gas pressure was essential for their manufacturing activity and sale of gas to customers. Consequently, the impugned order was set aside, and the appeal was allowed.