2015 (9) TMI 306 - AT - Service Tax

Denial of CENVAT Credit - goods transport agency service - Held that - prior to 01.04.2008 when the inclusive part of the definition allowed CENVAT credit in respect of outward transportation from the place of removal, would be valid and credit will be allowable in respect of outward transportation from the place of removal till 01.04.2008, the date on which the words from the place of removal were replaced by words up to the place of removal . It is not the case of the Revenue that the appellants have taken CENVAT credit in respect of transportation from a point beyond the place of removal . Moreover, it is the claim of the appellant that they had sold the goods on FOR destination basis and therefore, the credit was admissible even if definition was to be read as providing for credit up to the place of removal - Decision in the case of CCE & ST (LTU) Bangalore Vs ABB Ltd. 2011 (3) TMI 248 - KARNATAKA HIGH COURT followed - Decided in favour of assessee.

Summary

Issues:
1. Admissibility of CENVAT credit on outward transportation of finished goods.
2. Interpretation of terms of delivery "FOR" customer site.
3. Applicability of Notification No. 35/2004-ST dated 03.12.2004.
4. Legal precedent regarding CENVAT credit for outward transportation.

Analysis:

1. The appellants, manufacturers of glass products, availed CENVAT credit on service tax paid for goods transport agency service for inward and outward transportation. An audit revealed ineligibility for credit on outward transportation of finished goods, leading to a show-cause notice in 2008. The original adjudicating authority held the credit wrong, imposing penalties. The Commissioner (Appeals) reduced the penalty but upheld the demand and interest.

2. The appellants contended that their goods were sold on a "FOR" destination basis, making them eligible for CENVAT credit from the place of removal. They cited the case of ABB Ltd. vs. CCE Bangalore and the High Court of Karnataka's decision, emphasizing that credit was valid until 01.04.2008, when the definition changed to "up to the place of removal." The Tribunal found in favor of the appellant, allowing the credit for the relevant period.

3. The Tribunal's decision was based on the interpretation of the terms of delivery, legal precedents, and the applicability of Notification No. 35/2004-ST dated 03.12.2004. The case highlighted the importance of understanding the nuances of CENVAT credit eligibility concerning outward transportation and the impact of legal interpretations on such matters.

4. Ultimately, the Tribunal allowed the appeal, granting consequential relief to the appellant based on the High Court's decision and the specific circumstances of the case. The judgment underscored the significance of legal precedents and the need for clarity in interpreting laws related to CENVAT credit and transportation of goods for manufacturers.