2022 (7) TMI 821 - AT - Central Excise

Irregular availment of Cenvat credit of service tax - input services - GTA Services - services used beyond the place of removal i.e. factory - HELD THAT - The dispute in the present case pertains to the period prior to the amendment introduced vide Notification No. 10/2008-CE (N.T.) dated 1 March 2008 effective 1 April 2008 whereby the expression from the place of removal was substituted by the expression upto the place of removal . Therefore, the issue involved is squarely covered by para 7 of the decision of the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. 2018 (3) TMI 993 - SUPREME COURT where it was held that tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed. It is also found that the factum of payment of service tax on a reverse charge basis is not at all in dispute in the Show-cause Notice - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to denial of Cenvat credit of service tax for GTA services beyond the place of removal.

Analysis:
The Appellant, a chemical manufacturer, challenged the denial of Cenvat credit for service tax amounting to Rs.5,34,503/- related to Goods Transport Agency (GTA) services used for clearing finished goods. The dispute arose as the services were alleged to have been used beyond the place of removal, i.e., the factory, rendering them ineligible as input services under Rule 2(l) of the Cenvat Credit Rules.

The Appellant contended that the definition of input service until 31 March 2008 included services used for clearance of final products "from the place of removal," which, in this case, covered clearance from the factory directly to depots or customers, citing a decision of the Hon'ble Supreme Court. Additionally, the inclusive limb of the definition during the relevant period encompassed outward transportation "upto the place of removal," as defined under the Central Excise Act, 1944, which included depots/branches of the Appellant. The Appellant also argued that the payment of service tax on a reverse charge basis was not disputed in the Show-cause Notice, and thus, the denial of credit based on lack of documentary evidence was beyond the notice's scope.

The Revenue, represented by the Ld. D.R., supported the findings in the Order in Appeal. Upon hearing both sides and examining the records, the Tribunal noted that the dispute pertained to the period before an amendment that substituted "from the place of removal" with "upto the place of removal." Citing a decision of the Hon'ble Supreme Court, the Tribunal held that tax paid on transportation of final products from the place of removal up to the first point, whether a depot or customer, should be allowed. As the payment of service tax on a reverse charge basis was not disputed in the Show-cause Notice, the Tribunal set aside the Order-in-Appeal and allowed the appeal with any consequential relief.

In conclusion, the Tribunal ruled in favor of the Appellant, emphasizing the interpretation of the definition of input service and the payment of service tax on a reverse charge basis, as well as the applicability of relevant legal provisions and judicial decisions in determining the eligibility of Cenvat credit for GTA services used beyond the place of removal.