2012 (7) TMI 741 - AT - Service Tax

Denial of benefit of Cenvat Credit Scheme in respect of inputs services - as the amount shown to be paid by the transporter cannot be treated as service tax and credit cannot be extended to the appellant - Held that - As before taking a final decision in the matter, it is necessary to verify the facts that in respect of the credits claimed by the appellant there are invoices showing that service tax has been paid by the transporter. A verification at the place, where the said transporter is registered as a service provider and where he is filing service tax returns may be necessary - it is proper to remit this matter for de novo consideration by the adjudicating authority.

Summary

Issues:
- Availment of Cenvat credit for service tax paid by transporter
- Interpretation of Rule 9(1)(f) of Cenvat Credit Rules 2004
- Verification of payment of service tax by transporter
- Remittance of matter for de novo consideration by adjudicating authority

Analysis:

The judgment concerns two appeals related to the availing of Cenvat credit for service tax paid by a transporter for the period January 2005 to January 2008. The appellants, manufacturers of excisable goods, claimed credit based on invoices showing service tax paid by the transporter on freight amounts. The Revenue objected, stating that the consignee or consignor should pay service tax as per Rule 2(d)(v) of Service Tax Rules 1994. The appellant failed to produce relevant documents during earlier proceedings to prove the transporter's payment of service tax.

The appellant's counsel relied on Rule 9(1)(f) of Cenvat Credit Rules 2004, arguing that the invoices presented met the requirements for credit. The Revenue's representative contended that credit could only be taken if service tax was paid on input services, raising doubts about the transporter's tax payment. The Tribunal referenced a prior case allowing credit when the transporter paid service tax and the Revenue had not refunded it, but refrained from making a definitive decision on whether the transporter's tax payment could be credited.

The Tribunal emphasized the need for verification regarding the claimed credits and directed the matter to be remitted for fresh consideration by the adjudicating authority. The appellant was instructed to provide all relevant invoices, and the Revenue was given the option to accept the tax payments indicated or conduct verification at the transporter's registered location. The lower authorities' orders were set aside, keeping all issues open for further review.

In conclusion, both appeals were disposed of accordingly, with the judgment highlighting the importance of verifying the payment of service tax by the transporter before allowing Cenvat credit and emphasizing the need for a fresh decision by the adjudicating authority based on the provided guidelines.