2006 (11) TMI 1 - Commissioner - Central Excise

Cenvat Credit on outward transportation from factory for delivery at customer s place Cenvat Credit is allowed

Summary

Issues:
- Admissibility of Cenvat Credit on outward transportation under Cenvat Credit Rules, 2004
- Violation of principles of natural justice in the adjudication process
- Interpretation of the definition of "input service" under the Cenvat Credit Rules, 2004
- Denial of Cenvat Credit by the Adjudicating Authority

Analysis:
The case involved the Appellants challenging the Order-in-Original passed by the Adjudicating Authority regarding the admissibility of Cenvat Credit on outward transportation under the Cenvat Credit Rules, 2004. The Adjudicating Authority disallowed the credit, citing that outward transportation did not qualify as an input service as per Rule 2(1) of the Rules. The Appellants contended that transportation of goods from the factory to the customer's premises fell within the definition of "input service" and hence, the credit taken was valid.

The Appellants raised concerns about the violation of principles of natural justice during the adjudication process, emphasizing that their defense arguments and cited case laws were not adequately considered by the Adjudicating Authority. They argued that the Adjudicating Authority's conclusion was based on presumptions and assumptions, leading to a miscarriage of justice.

In a detailed analysis of the definition of "input service" under the Cenvat Credit Rules, the judgment highlighted that it was an inclusive definition covering various services, including outward transportation of finished goods. The presiding authority acknowledged that the transportation of goods from the factory to the customer's premises could be considered an input service under the Rules. The judgment emphasized that if the intention was to exclude credit for outward transportation, it would have been explicitly stated in the definition. Therefore, the denial of Cenvat Credit on outward transportation in the impugned orders was deemed improper.

Ultimately, after careful consideration of all arguments and the legal framework, the presiding authority set aside the impugned orders, ruling in favor of the Appellants. The appeals were allowed, and it was held that the Service Tax paid on transportation of finished goods from the factory to the customer's premises could be claimed as Cenvat Credit by the Appellants, as per the provisions of the Cenvat Credit Rules, 2004.