2014 (6) TMI 33 - AT - Service Tax

CENVAT Credit - GTA Service - Place of removal - Whether the appellant, could utilize CENVAT Credit for discharging its service tax liability on GTA service received in respect of inward transportation of inputs for the period from October 2005 to September 2006 beyond place of removal - Held that - By the amendment made with effect from 1st April, 2008 substituting the word from by the word upto all that has been done is to clarify the issue. Neither the services rendered to the customer for the purpose of delivering the goods at the destination was covered by the definition of input service prior to 1st April, 2008, nor is the same covered after 1st April, 2008. If the definition provided in Section 2(l)(ii) is read a whole, if would appear that outward transportation charges or taxes paid in regard thereto is claimable only with regard to those transports which were made from one place of removal to another place of removal. Therefore, it is held that the CENVAT Credit of service tax paid by the appellant on GTA service received in respect outward transportation of finished goods beyond the place of removal is not admissible to them. The lower authorities have thus correctly disallowed the credit of ₹ 5,02,949/- along with appropriate interest. On the aspect of imposition of penalties on the appellant on the second issue, I set aside the penalty of ₹ 1,00,000/- imposed upon the appellant under Rule 15(1) of the CENVAT Credit Rules, 2004 as the issue involved was one of interpretation of definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004 and was under litigation - Commissioner of Central Excise, Kolkata-VI Vs. Vesuvious India Limited 2013 (12) TMI 1025 - CALCUTTA HIGH COURT - Decided partly in favour of assessee.

Summary

Issues:
1. Utilization of CENVAT Credit for service tax on GTA service for inward transportation of inputs.
2. Admissibility of CENVAT Credit for service tax on outward transportation of finished goods beyond the place of removal.

Analysis:
1. The appellant, a manufacturer of excisable goods, utilized CENVAT Credit to pay service tax on GTA service for inward transportation of inputs. The Revenue objected, citing Rule 3(4)(e) of CENVAT Credit Rules, stating that CENVAT Credit could not be used for such payments. The adjudicating authority upheld the objection, demanding service tax payment of Rs.6,01,055/- and disallowing CENVAT Credit of Rs.5,02,949/-. The Commissioner (Appeals) affirmed this decision. However, the appellant argued that a previous Tribunal decision favored them, supported by relevant case laws. The Tribunal concurred, setting aside the service tax demand on this count.

2. The second issue pertained to the admissibility of CENVAT Credit for service tax on outward transportation of finished goods beyond the place of removal. The appellant failed to establish crucial factors such as the point of sale, ownership transfer, risk-bearing, and freight charges integration into the goods' price. The Tribunal noted that relevant case laws cited did not cover this aspect. Referring to a Calcutta High Court ruling, the Tribunal concluded that CENVAT Credit for service tax on outward transportation beyond the place of removal was not permissible. Consequently, the disallowance of CENVAT Credit amounting to Rs.5,02,949/- was deemed appropriate. The penalty imposed under Rule 15(1) of the CENVAT Credit Rules, 2004, amounting to Rs.1,00,000/-, was set aside due to the interpretational nature of the issue.

In summary, the Tribunal partially allowed the appeal, ruling in favor of the appellant concerning the utilization of CENVAT Credit for service tax on GTA service for inward transportation of inputs. However, it upheld the disallowance of CENVAT Credit for service tax on outward transportation of finished goods beyond the place of removal. The penalty imposed was set aside, considering the interpretational complexity of the matter.