2013 (3) TMI 477 - AT - Central Excise

Cenvat Credit Service Tax- Revenue filed an appeal against the order passed by the Commissioner (Appeals).The dispute in the present appeal relates to the Cenvat credit of Service tax paid by the respondents on the GTA service so received by him for transportation of billets which ultimately has been used for manufacture of galvanised parts of transmission tower and lining. The Revenue case is that inasmuch as the said billets are not brought into the respondents factory and are directly sent to the job workers factory, the Service tax paid by the appellant for transportation of said billets is not available to them as credit. Held that - Tribunal following the decisions of Hon ble High Court of Bombay in M/s. Coca Cola India Versus COMMISSIONER OF C. EX., PUNE-III 2009 (8) TMI 50 - BOMBAY HIGH COURT held that GTA service for procuring the MS billets which ultimately has been used for manufacture of galvanised parts of transmission tower and lining sold by the appellant is an input service and the appellant is entitled for the Cenvat credit. Revenue s appeal is accordingly rejected.

Summary

Issues:
Dispute over Cenvat credit of Service tax paid on GTA service for transportation of billets.

Analysis:
The case involved a dispute regarding the Cenvat credit of Service tax paid by the respondents on the GTA service for transporting billets, which were essential inputs for the final product. The revenue contended that since the billets were not brought into the factory but directly sent to a job worker, the Service tax paid for their transportation was not eligible for credit. However, the respondents argued that they had paid the freight along with the Service tax and, as the billets were crucial raw materials, the credit should be allowed.

The Commissioner (Appeals) accepted the respondents' argument, emphasizing that the transportation cost of the billets, including Service tax, was borne by the respondents. The Commissioner held that the GTA service for procuring the billets, which were used in manufacturing the final product, qualified as an input service under the Cenvat Credit Rules. Citing relevant legal precedents, the Commissioner concluded that any input service forming part of the final product's value should be eligible for Cenvat credit.

The Tribunal upheld the Commissioner's decision, noting that the billets were indeed the raw material for the final product. The Tribunal emphasized that the transportation of the billets, even if directly sent to the job worker, should not be a reason to deny credit, especially when the freight and Service tax were paid by the respondents. Highlighting that the billets were crucial starting raw materials for the final product, the Tribunal deemed their transportation as an input service. Consequently, the Tribunal rejected the revenue's appeal, affirming the Commissioner (Appeals) order.

In conclusion, the Tribunal's judgment clarified that the transportation of essential raw materials, even if sent directly to a job worker, qualifies as an input service eligible for Cenvat credit. The decision underscored the importance of considering the role of raw materials in the manufacturing process and upheld the respondents' entitlement to the credit for the Service tax paid on the GTA service for transporting the billets.