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2023 (11) TMI 826 - AT - Central ExciseCENVAT Credit - freight charges incurred for outward transportation of their finished products from the factory to the place of dealers and buyers - place of removal - period January 2007 to February 2008 - HELD THAT - The issues stands covered in the appellant s own case 2022 (5) TMI 904 - CESTAT CHENNAI . The Tribunal has analysed the definition of input service prior to 1/4/2008 and after held that We make it clear that we have set aside the orders of the Tribunal as well as the Adjudicating Authority with regard to disallowance of Cenvat credit in respect of GTA services. The demand cannot sustain and requires to be set aside - the impugned order is set aside - Appeal allowed.
Issues Involved:
1. Eligibility for CENVAT credit on Service Tax paid on outward transportation of finished products prior to 1/4/2008. 2. Interpretation of the definition of 'input service' before and after 1/4/2008. Summary: Issue 1: Eligibility for CENVAT credit on Service Tax paid on outward transportation of finished products prior to 1/4/2008. The appellant, engaged in manufacturing cement, availed CENVAT credit of Service Tax paid on freight charges for outward transportation of finished products from the factory to dealers and buyers. The department disputed the eligibility of this credit, arguing that outward transportation from the place of removal is not covered under the definition of 'input service' as per Rule 2(l) of CENVAT Credit Rules 2004. A Show Cause Notice dated 3/3/2009 was issued for the period January 2007 to February 2008 to disallow the credit, recover the same with interest, and impose a penalty u/s Rule 15(3) of CENVAT Credit Rules 2004. The original authority confirmed the demand, interest, and penalty, which was upheld by the Commissioner (Appeals). The appellant appealed against this decision. Issue 2: Interpretation of the definition of 'input service' before and after 1/4/2008. The Tribunal analyzed the definition of 'input service' before and after 1/4/2008. Prior to 1/4/2008, the definition included services used by the manufacturer for clearance of final products "from the place of removal." Post 1/4/2008, the definition was amended to include services used for clearance of final products "up to the place of removal." The department viewed outward transportation as a post-sale expenditure, hence ineligible for credit. The period of dispute in this case is prior to 1/4/2008. The Hon'ble Supreme Court in M/s. Vasavadatta Cements Ltd. (2018 (11) GSTL 3 (S.C.)) held that the expression "from the place of removal" includes transportation up to the depot or customer's premises, making the tax paid on such transportation eligible for credit. This principle was affirmed by the jurisdictional High Court in M/s. Bata India Ltd. Vs. Commissioner of Customs & Central Excise, Chennai - III (2019 (24) GSTL 326 (Mad.)), which applied the Vasavadatta Cements decision to similar facts. The Tribunal found that the facts in the present case are identical to those in the Vasavadatta Cements case. Therefore, the demand for disallowance of credit cannot be sustained and must be set aside. Conclusion: The impugned order is set aside. The appeal is allowed with consequential reliefs, if any. The judgment was dictated in open court.
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