2018 (12) TMI 663 - AT - Central Excise

CENVAT Credit - input services - GTA Service for outward transportation of the goods from factory to buyers premises - sale on FOR basis - place of removal - Held that - This issue is no longer res integra and has been settled by the Hon ble Apex Court in the case of Andhra Sugars Ltd., 2018 (2) TMI 285 - SUPREME COURT OF INDIA where it was held that Once it is accepted that place of removal is the factory premises of the assessee, outward transportation from the said place would clearly amount to input service - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Admissibility of CENVAT credit on GTA services for outward transportation of goods before 01.04.2008
- Applicability of limitation period on availing credit
- Precedents set by High Courts and Supreme Court on similar cases

The judgment pertains to an appeal against an Order-in-Appeal, where the appellant, engaged in manufacturing steel products, paid service tax on GTA services under reverse charge mechanism during April 2006 to June 2007. The appellant claimed credit for this service tax paid on outward transportation of goods to buyers' premises. A show cause notice was issued, demanding reversal of credit beyond the place of removal, contending that the transportation was not connected to manufacturing activity. The Original Authority confirmed the demand, imposing penalties, which the appellant challenged before the First Appellate Authority on the grounds of admissibility of credit pre-01.04.2008 and the limitation period. The First Appellate Authority upheld the order, leading to the current appeal.

The appellant argued that during the relevant period, the definition of input service under CENVAT Credit Rules, 2004 allowed credit "from the place of removal," making them eligible for CENVAT credit as the amendment to "up to the place of removal" came into effect only post-01.04.2008. Additionally, the appellant cited the decision of the Hon'ble High Court of Karnataka in ABB case, where it was held that credit on outward transportation of goods remains admissible post the 2008 amendment. Furthermore, referencing the case of Gray Gold Cements Ltd., the appellant contended that credit on transportation up to buyers' premises is valid as the service tax is consumed by the customer.

The appellant also raised the issue of limitation, arguing that the notice issued on 08.06.2010 for the period April 2006 to June 2007 was time-barred as there was no evidence of fraud, willful misstatement, or intent to evade duty payment. The Tribunal, after considering the arguments and precedents, notably the judgments of the Hon'ble Apex Court in Andhra Sugars Ltd. and Vasavadatta Cements Ltd., concluded that CENVAT credit on input services for GTA services for outward transportation of goods before 01.04.2008 is admissible. Therefore, the appeal was allowed, and the impugned order was set aside.

The judgment highlights the importance of understanding the nuances of CENVAT credit rules, the impact of legal precedents on similar cases, and the significance of timelines in availing such credits. It underscores the need for clarity in interpreting statutory provisions and the reliance on judicial decisions to support legal arguments effectively.