2020 (10) TMI 319 - AT - Service Tax

CENVAT Credit - input services - outward transportation services from factory to customer s premises - period in dispute i.e from January 2005 to December 2007 - HELD THAT - In identical matter in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. VESUVIOUS INDIA LTD. 2013 (12) TMI 1025 - CALCUTTA HIGH COURT , the issue was decided against the assessee. The said decision was further carried in appeal before the Hon ble Supreme Court which has settled the issue in favour of the assessee. In the said decision dated 17.01.2018, while deciding the batch of appeals filed by Department as well as assessees, COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. 2018 (3) TMI 993 - SUPREME COURT , the Apex Court has inter-alia held that the assessee is legally eligible to avail credit on outward transportation availed from place of removal upto a certain point, whether it is a depot or customer s premises. In the instant case, the availment of credit on outward transportation from factory gate to customer s place pertains to period prior to April 2008 i.e. prior to period when the definition of input service was amended. Since the credit eligibility finally stands decided by the Apex Court in favour of assessee, the impugned adjudication order is liable to be set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of Cenvat credit on service tax paid on outward transportation services from factory to customer's premises.

Analysis:
The appeal was filed against the disallowance of Cenvat credit of service tax paid on outward transportation services. The Tribunal allowed the appeal based on a decision by the Karnataka High Court, stating that the assessee is eligible for credit on outward transportation services as per the definition of 'input service' before the 2008 amendment. However, the Revenue appealed to the Calcutta High Court, which disagreed with the Karnataka High Court's decision and remanded the matter back to the Tribunal for reconsideration.

In a similar case, the issue was decided against the assessee by the CCE, Kolkata vs. Vesuvious India Ltd, but the Supreme Court later settled the matter in favor of the assessee in the case of CCE vs. Vasavadatta Cements Ltd. The Supreme Court clarified that the assessee is eligible to avail credit on outward transportation from the place of removal up to a certain point, whether it is a depot or customer's premises.

The Full Bench of the CESTAT and the High Court affirmed that services from the place of removal till the final destination, including transportation, fall within the definition of 'input service.' The definition includes outward transportation of the final product up to the place of removal. The judgment highlighted the importance of interpreting the definition restrictively and liberally based on the wording used.

The Tribunal noted that the credit eligibility for outward transportation services from the factory gate to the customer's place was for the period before the 2008 amendment. Since the Apex Court had already decided in favor of the assessee regarding credit eligibility, the adjudication order disallowing the credit was set aside, and the appeal by the assessee was allowed with consequential relief as per law.