2009 (5) TMI 346 - AT - Service Tax

Cenvat credit - business of refining crude and marketing of petroleum products Service tax credit taken on transportation of oil through pipelines and utilized for payment of tax on their output service under Storage and warehousing - Revenue proceeded against the appellants on the ground that they are not entitled to take credit of the service tax paid on the transportation of their own goods - Commissioner has denied the said input service tax credit stating that the transportation of the goods belonging to the appellants in the pipeline is related to their business - As the transportation of goods belonging to all the three companies have to be done together in view of the technological necessity, the transportation of the goods belonging to other oil companies is necessarily related to their business activity of the appellant and by virtue of the definition of input service, it can be called as input service for providing the output service of storage and warehousing. In our view prima facie the appellants have a strong case on merits. stay granted

Summary

The Appellate Tribunal CESTAT, Bangalore, in the case of 2009 (5) TMI 346, heard an appeal where the appellants were required to pre-deposit a sum of Rs. 2,59,97,348 as duty, penalty, and interest under Section 75. The dispute arose from the disallowed Cenvat credit related to the transportation of petroleum products through pipelines. The Commissioner had denied the input service tax credit, arguing that transportation of their own goods did not qualify as an input service. The appellants contended that the transportation of goods belonging to all three oil companies was a technological necessity and related to their business activity of providing storage and warehousing services. The Tribunal observed that the transportation of goods was necessary for the business activity of the appellants and ordered a full waiver of the pre-deposit of the dues. The judgement was pronounced by S/Shri T.K. Jayaraman and M.V. Ravindran.