2010 (5) TMI 333 - AT - Service Tax

Cenvat Credit - Input Service - The issue in this case relates to the question as to whether the appellant-manufacturer can take credit of service tax paid on the freight relating to transportation of the finished goods from the factory to the customers premises. Said credit was denied. However, both sides confirmed that issue involved in instant case was subject matter of Larger Bench s decision in case of ABB Ltd. v. CCE & ST 2009 -TMI - 34139 - CESTAT, BANGALORE and said decision had since been stayed by High Court. Held that - thus the instant appeal was to be listed after decision of High Court.

Summary

Issues:

1. Whether the appellant-manufacturer can take credit of service tax paid on the freight for transportation of finished goods.

Analysis:

The appeal was considered afresh based on the order of the Hon'ble Madras High Court. The issue revolved around whether the manufacturer could claim credit for service tax paid on freight for transporting finished goods. The appellant's counsel argued that, due to the unique nature of the goods (liquid nitrogen and liquid oxygen), the place of removal should be considered the customers' premises. It was also highlighted that freight was included in the assessable value of the goods. On the other hand, the Department's representative contended that the place of delivery could not be equated with the place of removal, and since manufacturing was completed before transportation, the freight incurred could not be treated as an input service.

Furthermore, both sides acknowledged that the matter had been referred to the Larger Bench in the ABB Ltd. case, which had conflicting decisions with previous cases like India Japan Lighting (P.) Ltd. The decision of the Larger Bench was under stay by the Hon'ble High Court of Karnataka, pending the Department's appeal. Consequently, both parties agreed to await the outcome of the Department's appeal before finalizing the decision in the present case.

As a result, considering the submissions from both parties and with their consent, the Registry was instructed to schedule the appeal after the High Court of Karnataka's decision on the ABB Ltd. case. Both sides were granted the liberty to inform the Bench once the High Court's decision was available, ensuring the final decision in the appeal was deferred until the resolution of the ABB Ltd. case.