2009 (6) TMI 458 - AT - Service Tax

Transportation of goods- The assessee was a manufacturer of excisable products. it made a sale at the factory gate on FOR basis and claimed Cenvat Credit of service tax paid in respect of outward transportation of finished goods from the factory gate to the customer s premises. The Assistant Commissioner disallowed the claim and confirms the demand against it. Commissioner(Appeals) set aside the order of Assistant Commissioner by holding that the outward transportation of finished goods from the factory gate to the customer s premises is covered by the definition of input service. In the light of the judgment of ABB Ltd. v. CCE & ST 2009 -TMI - 34139 - CESTAT, BANGALORE Held that- there is no infirmity in the order of Commissioner (Appeals), thus the revenue appeal has dismissed.

Summary

Issues:
Whether the Respondent is eligible for Cenvat credit of service tax paid on outward transportation of finished goods.

Analysis:
The appeal by the revenue was against the Order-in-Appeal passed by CCE (Appeals), Allahabad. The Respondents are engaged in the manufacture of HDPE, PP Bags, PVC Pipes classifiable under specific chapters of the Central Excise Tariff Act, 1985. They are also registered under the Finance Act, 1994, for paying Service Tax related to transport of goods by road. The issue revolved around the Respondents taking Cenvat credit for outward transportation of finished goods, which was disallowed by the Assistant Commissioner but later set aside by the Commissioner (Appeals). The revenue contended that outward transportation is not covered under the definition of 'input service', emphasizing the lack of evidence regarding sales taking place at the customer's premises.

The learned Departmental Representative argued against the Commissioner (Appeals)'s decision, highlighting the absence of evidence supporting sales at the customer's premises and asserting that transportation to the customer's premises would impact the assessable value for excise duty payment. On the other hand, the Respondent's Counsel referred to a judgment by the Larger Bench in ABB Ltd. v. CCE & ST, emphasizing that outward transportation is considered an input service under the definition of 'activities relating to business'. The Counsel argued that valuation and Cenvat credit issues are independent, citing the Tribunal's decision that they are not relevant to each other.

After considering submissions and records, the Technical Member concluded that the issue of eligibility for Cenvat credit on outward transportation of finished goods is settled in favor of the Respondent based on the Larger Bench's decision. The judgment clarified that outward transportation from the place of removal qualifies as an input service under the definition of 'activities relating to business'. It was emphasized that valuation and Cenvat credit issues are distinct and not interrelated. Consequently, the appeal by the revenue was dismissed, affirming the impugned order, and the cross objection filed by the Respondents was also disposed of accordingly.