2019 (4) TMI 725 - AT - Central Excise

CENVAT Credit - input services - Outward Transportation of Goods upto buyer s premises - Held that - This very Bench relied upon by the Ld. Advocate in MS ASHOK LEYLAND LTD. VERSUS COMMISSIONER OF GST&CE (SALEM) 2019 (4) TMI 641 - CESTAT CHENNAI wherein the matters have been remanded to the adjudicating authority to decide the matter afresh in view of the judgments of M/s. Ultra Tech Cements Ltd., M/s. Roofit Industries Ltd. 2015 (4) TMI 857 - SUPREME COURT and Board s Circular dated 08.06.2018. Appeal allowed by way of remand.

Summary

Issues:
1. Disallowance of Cenvat credit on service tax paid for outward transportation.
2. Penalty imposition under the Central Excise Rules, 2004.

Issue 1 - Disallowance of Cenvat credit on service tax paid for outward transportation:
The case involved two appeals where the appellants, manufacturers of excisable goods, were availing Cenvat credit on inputs, input service, and capital goods. In Appeal No. 42661 of 2017, a Statement of Demand was issued disallowing credit for service tax paid on outward transportation. The Original authority confirmed the demand, reduced the penalty, and the Commissioner (Appeals) upheld the demand but set aside the penalty. In Appeal No. 42662 of 2018, a Show Cause Notice was issued disallowing credit for service tax paid on outward transportation, and after adjudication, the demand was confirmed with a penalty. The Commissioner (Appeals) allowed the appeal of the department, stating that service tax paid on outward transportation is not available to the respondent. During the hearing, the appellant argued that the goods were delivered at the buyer's premises, making the credit eligible. The Department representative supported the impugned order, citing the decision in M/s. Ultra Tech Cements Ltd. The Tribunal remanded the cases to the adjudicating authority to decide based on Supreme Court decisions and Board's Circular, emphasizing the need for documentary evidence to ascertain the contract terms.

Issue 2 - Penalty imposition under the Central Excise Rules, 2004:
The penalty under Rule 15(1) of the Central Excise Rules, 2004, was imposed in Appeal No. 42661 of 2017, but reduced if paid within a specified period. In Appeal No. 42662 of 2018, an equal penalty was imposed under Rule 15(2) of the Cenvat Credit Rules, 2004, with an option for a reduced penalty if paid within a specific timeframe. The Tribunal's decision to remand the cases did not specifically address the penalty imposition, focusing primarily on the disallowance of Cenvat credit on service tax paid for outward transportation. The Tribunal left the contentions of both the assessee and the Revenue open for further consideration by the adjudicating authority.

In conclusion, the Tribunal allowed the appeals by way of remand, directing the adjudicating authority to decide the matter afresh considering the Supreme Court decisions and the Board's Circular, emphasizing the importance of documentary evidence to determine the eligibility of Cenvat credit on service tax paid for outward transportation and the contractual terms between the parties. The issue of penalty imposition was not directly addressed in the remand order, leaving it open for further adjudication.