2013 (10) TMI 1434 - AT - Service Tax

Summary

Issues involved: Interpretation of Cenvat Credit Rules u/s 2(1), applicability of Rule 14 of Cenvat Credit Rules, imposition of penalty u/s 11A of Central Excise Act, 1944.

Summary:

Interpretation of Cenvat Credit Rules u/s 2(1):
The appellant, a manufacturer of electric storage batteries, included charges towards freight and insurance in the assessable value of goods sold and paid excise duty accordingly. However, the department denied Cenvat credit of Service Tax paid on outward transportation charges, citing an amendment to Rule 2(1) of the Cenvat Credit Rules. The appellant contended that as per the terms of sale, the 'place of removal' was the buyer's premises, and they were entitled to the credit as they bore transportation costs.

Applicability of Rule 14 of Cenvat Credit Rules:
The department sought recovery of an amount along with interest and penalty under Rule 14 of the Cenvat Credit Rules, which was contested by the appellant. The appellant argued that they discharged Excise duty liability inclusive of transportation costs and thus should be granted the Cenvat credit.

Imposition of penalty u/s 11A of Central Excise Act, 1944:
The lower appellate authority rejected the appellant's appeal, leading to the appellant approaching the higher authority. The Tribunal noted that the 'place of removal' was the buyer's premises, making transportation up to that point an eligible input service. Relying on this interpretation, the Tribunal granted the appellant unconditional waiver from pre-deposit of dues and stayed the recovery during the appeal's pendency.