2013 (8) TMI 498 - AT - Central Excise

Cenvat credit - Outward transportation of the goods - Commissioner disallowed benefit - Held that - Commissioner relied on decision of ABB Ltd. Vs. CCE 2009 (5) TMI 48 - CESTAT, BANGALORE and rejected appeal however, this decision is now reversed by Karnataka High Court 2011 (3) TMI 248 - KARNATAKA HIGH COURT - Therefore following this decision - Decided against Revenue.

Summary

Issues:
1. Eligibility of Cenvat Credit on service tax paid on outward transportation.
2. Interpretation of relevant legal precedents and decisions.

Analysis:
1. Eligibility of Cenvat Credit on service tax paid on outward transportation:
The case involved M/s Technical Associates Ltd., a manufacturer of Electronics Transformers availing Cenvat Credit facilities under Cenvat Credit Rules, 2004. The dispute arose when the Assistant Commissioner issued a Show Cause Notice demanding Cenvat Credit of service tax paid on outward transportation of final products. The Commissioner Central Excise (Appeal) upheld the demand, leading to the appellant's challenge in the present appeal. The key issue was the eligibility of Cenvat Credit on service tax paid on outward transportation, amounting to Rs. 41,106/- for the months of January 2006 to June 2006. The appellant argued that the Hon'ble High Court of Karnataka had ruled in favor of the assessee in a similar case, allowing Cenvat Credit on outward transportation service tax prior to 01.04.2008. The tribunal, following the High Court's decision, set aside the Order in Appeal and allowed the appeal, stating that the case fell within the scope of the High Court's ruling.

2. Interpretation of relevant legal precedents and decisions:
The tribunal's decision was based on the interpretation and application of legal precedents and decisions. The Commissioner (Appeal) had relied on the fact that the CESTAT Larger Bench decision in the case of M/s ABB Ltd. Vs. CCE, Bangalore & Others, regarding the eligibility of outward transportation service for Cenvat Credit, had not been accepted by the Department. However, the tribunal noted that the Hon'ble High Court of Karnataka had ruled in favor of the assessee in a similar case, establishing the admissibility of Cenvat Credit on service tax paid on outward transportation before 01.04.2008. By aligning the case at hand with the High Court's decision in the ABB Ltd. case, the tribunal concluded that the appellant was entitled to the Cenvat Credit, thereby setting aside the earlier Order in Appeal. The judgment highlighted the importance of legal precedents and the significance of higher court decisions in resolving disputes related to tax credits and liabilities.

In conclusion, the tribunal's decision in the appeal brought clarity to the eligibility of Cenvat Credit on service tax paid on outward transportation, emphasizing the impact of legal precedents and higher court rulings on such matters. The analysis of relevant legal precedents played a crucial role in resolving the dispute and upholding the appellant's entitlement to the Cenvat Credit, as established by the Hon'ble High Court of Karnataka's decision in a similar case.