2015 (12) TMI 814 - AT - Service Tax

Denial of excess CENVAT Credit - transportation charges - Notification No. 13/2008-S.T. - Held that - As per Rule 3 of the Cenvat Credit Rules, 2004 an assessee is entitled to take Cenvat Credit of the duty paid. Admittedly in this case there is no dispute regarding the payment of duty. Therefore, whatever duty is being paid, appellant is entitled to take Cenvat Credit. In these circumstances, I hold that proceedings in this case were not required to be initiated. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of excess Cenvat credit on transportation charges paid by the appellant.

Analysis:
The appellant, a manufacturer of excisable goods, transported inputs and paid Service Tax on transportation charges. The appellant paid the full amount in cash and took Cenvat credit, contrary to the requirement under Notification No. 13/2008-S.T. to pay Service Tax on 25% of the transportation charges. The revenue contended that the appellant should only take Cenvat credit on 25% of the Service Tax on the value of 25% of transportation charges. This led to proceedings against the appellant, resulting in the denial of Cenvat credit, imposition of duty, interest, and penalty.

Upon hearing the parties, it was noted that as per Rule 3 of the Cenvat Credit Rules, 2004, an assessee is entitled to take Cenvat Credit of the duty paid. Since there was no dispute regarding the payment of duty in this case, the appellant was deemed entitled to take Cenvat Credit for the duty paid. Therefore, it was concluded that the initiation of proceedings against the appellant was unnecessary.

Consequently, the impugned order denying the excess Cenvat credit was set aside, and the appeal was allowed with any consequential relief that may arise. The judgment was dictated and pronounced in the open court by the Member (J) Shri Ashok Jindal.