2021 (6) TMI 531 - AT - Central Excise

CENVAT Credit - input services - outward transportation on FOR basis - place of removal - Landline Telephone - scope of SCN - HELD THAT - The show cause notice is vague as it does not contain any specific allegation whether the goods removed from the factory are by way of any clearance in DTA or for the purpose of export - the contention made by the appellant in reply to the show cause notice as well as by way of certificate issue by the Unit Head, M/s. Hindustan Zinc Ltd., certifying that the clearance were made to the port of export and the contention made by the appellant have not been found to be untrue, and still have been rejected without there being a contrary finding of fact - credit allowed. Landline telephone - fixing of land line at the residence of the employees/officers - HELD THAT - The appellant have not taken specific plea that the phones were provided at the residence of the key officers, which are required to be in touch with the Plant and affairs of the company - Disallowance of credit is upheld. Appeal allowed in part.

Summary

Issues Involved:
1. Disallowance of cenvat credit on outward transportation on FOR basis.
2. Disallowance of cenvat credit on landline phones connection provided at the residence of employees/officers.

Analysis:

Issue 1: Disallowance of cenvat credit on outward transportation on FOR basis:
The appellant's cenvat credit on outward transportation from the factory to the port of export was challenged by the Revenue. The Revenue argued that the cenvat credit was wrongly taken as the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004, only covers services availed by a manufacturer up to the clearance of the final product from the place of removal. The Revenue contended that in cases of direct clearance to the customer, the place of removal is the factory gate, and thus, credit for service tax paid on outward transportation beyond the factory gate is not admissible. However, the appellant argued that in cases of export, the place of removal should be considered as the port of export, where the transfer of property occurs. The appellant relied on circulars to support their position. The Adjudicating Authority disallowed the credit, which was upheld by the Commissioner (Appeals). The appellant provided evidence to support their claim that the transportation was for export purposes, and the Tribunal found the show cause notice vague and lacking specific allegations. As the appellant's contentions were not proven untrue, the Tribunal allowed the appeal on this ground.

Issue 2: Disallowance of cenvat credit on landline phones connection:
Regarding the disallowance of cenvat credit on landline phones provided at the residence of employees/officers, the appellant did not specifically argue that the phones were necessary for key officers in touch with the plant and company affairs. As a result, the disallowance of cenvat credit for landline phones was upheld, amounting to Rs. 11,302. The Tribunal allowed the appeal in part, granting consequential benefits to the appellant. Penalties were set aside due to the absence of evidence of mala fide conduct by the appellant.

In conclusion, the Tribunal allowed the appeal on the disallowance of cenvat credit for outward transportation on FOR basis due to lack of specific allegations and upheld the disallowance of cenvat credit for landline phones provided at the residence of employees/officers.