2020 (10) TMI 1133 - AT - Central Excise

CENVAT Credit - input services - outward transportation of its finished goods, i.e. biscuits, which were transported up to the customers premises - place of removal - period from January, 2005 to September, 2007 - suppression of facts or not - HELD THAT - The issue is no more res-integra in view of the decision of the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. 2018 (3) TMI 993 - SUPREME COURT . By this judgement, the Hon ble Supreme Court held that 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 order is liable to be sustained. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Availment of cenvat credit on service tax paid on outward transportation of finished goods.
- Allegation of suppression of facts and imposition of penalty.
- Interpretation of the phrase "clearance of final products from the place of removal."
- Applicability of the decision in the case of CCEx., Belgaum Vs. Vasavadatta Cements Ltd.
- Impact of the amendment to the definition of input service w.e.f. 1-4-2008.

Analysis:
1. The respondent assessee availed cenvat credit on service tax paid on outward transportation of biscuits up to customers' premises from January 2005 to September 2007, leading to a show cause notice alleging suppression of facts. The adjudicating authority confirmed the demand, imposed interest, and penalty under Rule 15 of Cenvat Credit Rules, 2004 and Section 11AC of the Central Excise Act, 1944.

2. On appeal, the Ld. Commissioner (Appeals) set aside the Order-in-Original in favor of the assessee, citing the decision of the Hon'ble Karnataka High Court in CCEx. Vs. ABB Ltd. The Department disagreed, arguing that changing "from" to "upto" did not alter the law on outward transportation. The matter was brought before the Tribunal for resolution.

3. The Tribunal, after hearing both sides and reviewing the records, noted the issue's precedence in the decision of the Hon'ble Supreme Court in CCEx., Belgaum Vs. Vasavadatta Cements Ltd. The Supreme Court clarified that the assessee could claim credit on outward transportation from the place of removal up to a certain point, whether a depot or customer's premises.

4. The Tribunal emphasized that the definition of input service includes services from the place of removal to the destination, encompassing transportation charges. The amendment effective from 1-4-2008 replaced "from" with "upto," limiting credit availability only up to the place of removal or the customer's location, as per the amended Rule.

5. The Tribunal upheld the assessee's right to credit on outward transportation pre-April 2008, aligning with the Supreme Court's decision. Consequently, the appeal by the Revenue was dismissed, affirming the order in favor of the assessee.

This detailed analysis of the judgment highlights the key issues, legal interpretations, and the final decision rendered by the Tribunal based on the relevant legal precedents and amendments to the law.