2019 (2) TMI 1096 - AT - Central Excise

CENVAT Credit - outward freight - place of removal is factory gate - period of dispute is from 01.01.2005 to 2007-2008 2008-2009 and 2009-2010 (Upto November 2009) - Held that - The present issue is no more res-integra in view of the recent decision of the Hon ble Supreme Court in the case of Commr. of Central Excise Belgaum Vs. Vasavadatta Cements Ltd. 2018 (3) TMI 993 - SUPREME COURT where it was held that rom 01.04.2008 with the aforesaid amendment the CENVAT credit is available only upto the place of removal whereas as per the amended Rule from the place of removal which has to be upto either the place of depot or the place of customer as the case may be - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availing cenvat credit on service tax paid on outward freight when the place of removal is the factory gate.
2. Interpretation of the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004.
3. Application of recent Supreme Court decision in Commr. of Central Excise, Belgaum Vs. Vasavadatta Cements Ltd. to the case.
4. Analysis of the Full Bench of CESTAT decision in M/s. ABB Limited case and its relevance.

Analysis:

1. The appellant availed cenvat credit on service tax paid on outward freight, despite the place of removal being the factory gate. The dispute arose from a show-cause notice issued in 2010, mentioning amounts already reversed/paid post 01.04.2008. The Adjudicating Authority confirmed a demand and imposed a penalty under Rule 14 of Cenvat Credit Rules, 2004. The Commissioner (Appeals) upheld the decision, leading to the present appeal.

2. The issue of interpreting the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004 was crucial. The Hon'ble Supreme Court's decision in Commr. of Central Excise, Belgaum Vs. Vasavadatta Cements Ltd. was cited, emphasizing the distinction between the two parts of the definition. The judgment highlighted the importance of services used by the manufacturer in relation to the manufacture of final products and their clearance from the place of removal.

3. The recent Supreme Court decision provided clarity on the interpretation of "input service" and its application to the case at hand. The judgment emphasized the significance of services used by the manufacturer in relation to the manufacture of final products and their clearance from the place of removal. The ruling set a precedent for the present appeal, guiding the decision-making process.

4. The Full Bench of CESTAT decision in M/s. ABB Limited case was analyzed for its relevance to the current matter. The interpretation of the Rule 2(l) definition of "input service" was crucial, particularly regarding services used by the manufacturer in relation to the manufacture of final products and their clearance from the place of removal. The judgment provided a clear framework for determining the admissibility of Cenvat credit in such cases.

By following the Supreme Court's precedent and the interpretation provided by the Full Bench of CESTAT, the impugned order was set aside, and the appeal filed by the appellant was allowed. The judgment emphasized the correct application of the definition of "input service" and highlighted the importance of services related to the manufacture and clearance of final products from the place of removal.