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2018 (7) TMI 1585 - AT - Central ExciseCENVAT Credit - reversal of input services - removal of inputs as such - GTA service for inward transportation of iron ore and coal - Waste - iron ore fines and coal fines - Held that - The iron ore fines and coal fines generated in the process of manufacture, are nothing but waste products - The iron ore fines and coal fines had not been manufactured by the appellant but were generated in the process of manufacture, and hence, the appellant has not infringed the provisions of Rule 2(l) of the Cenvat Credit Rules, 2004. Identical issue decided in the case of SEVEN STAR STEELS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BBSR-II 2013 (5) TMI 119 - CESTAT KOLKATA , where it was held that when the credit availed inputs or capital goods are removed from the factory of the assessee, sub-rule (5) of Rule 3 of the Cenvat Credit Rules, 2004 provides for recovery of equal amount of credit. There is no such provision to reverse credit of service tax availed in relation to such inputs or capital goods when removed from the factory. Appeal allowed - decided in favor of appellant.
Issues:
Recovery of CENVAT Credit on GTA service for transportation of iron ore and coal, separation of iron ore fines and coal fines, applicability of Rule 2(l) of Cenvat Credit Rules, 2004, reversal of CENVAT credit on inputs, interpretation of Rule 3(5) of Cenvat Credit Rules, 2004. Analysis: The case involved a dispute regarding the recovery of CENVAT Credit on GTA service for the transportation of iron ore and coal, where iron ore fines and coal fines were separated and sold. The appellant argued that the fines were waste products generated in the manufacturing process and not infringing Rule 2(l) of the Cenvat Credit Rules, 2004. The Revenue contended that the fines should be considered as inputs. The Tribunal examined the facts and previous decisions, noting that the iron ore fines and coal fines were waste products and not used in the final product, thus not qualifying as inputs. The Tribunal differentiated the case from a previous decision in the appellant's favor, emphasizing that the Commissioner (Appeals) had decided the issue on merits. The Tribunal also referred to a similar case where the appeal was allowed as the iron ore fines were not considered inputs due to being sold without being used in the manufacturing process. The Tribunal further analyzed the interpretation of Rule 3(5) of the Cenvat Credit Rules, 2004, which pertains to the reversal of CENVAT credit on inputs or capital goods. The Tribunal cited previous judgments and highlighted that the rule does not apply to CENVAT credit on input services. Referring to specific provisions and case law, the Tribunal emphasized that the term "input service" is distinct from "input," and Rule 3(5) does not cover CENVAT credit on input services. The Tribunal reiterated that the appellant had correctly availed the credit as per statutory provisions and ruled in favor of the appellant based on consistent legal principles and judgments. In conclusion, the Tribunal set aside the impugned order and allowed the appeal filed by the appellant, providing consequential relief as per the law. The decision was based on the finding that the iron ore fines and coal fines were waste products and not used in the manufacturing process, aligning with the interpretation of relevant rules and legal precedents. The Tribunal's detailed analysis clarified the distinction between inputs, input services, and the reversal of CENVAT credit, ensuring a fair and legally sound judgment.
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