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2024 (1) TMI 632 - AT - Central ExciseCENVAT Credit - input services - goods transport agency - denial on the ground of ineligibility of tax paid on utilization of goods transportation agency service for outward movement of manufactured goods, is the determination of scope of input service in relation to domestic clearances up to March 2008 and on goods cleared for export for the period thereafter. HELD THAT - It is evident from the decision of the Hon ble High Court of Karnataka in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BANGALORE VERSUS M/S ABB LTD. AND OTHERS 2011 (3) TMI 248 - KARNATAKA HIGH COURT , which was affirmed by the Hon ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, BELGAUM VERSUS M/S. VASAVADATTA CEMENTS LTD. 2018 (3) TMI 993 - SUPREME COURT , that, for the period prior to April 2008, that coverage of outward transportation within the definition of input service in rule 2 (l) of CENVAT Credit Rules, 2004 is beyond dispute. It is also evident from the records that the first appellate authority deliberately preferred resort to interpretation afforded by decisions of the Tribunal over the ruling of the Hon ble High Court. The reversal of the order of the original authority, dropping proceedings for the period prior to April 2008, by the first appellate authority is contrary to law and is, therefore, set aside. The eligibility of credit on outward transportation in relation to export goods has not been examined by the first appellate authority who has restricted the findings to the applicability of the decision in re ABB Ltd which, for the period upto March 2008, has attained finality. Thus, it is constrained in examining the legality and propriety of the conformation of demand by the first appellate authority for the period after March 2008. This needs rectification and, for that limited purpose, the matter remanded back to the first appellate authority for rendering a finding in accordance with law as settled. The appeal is allowed by setting aside the impugned order in full for the period prior to April 2008 and for remaining by remand to the first appellate authority.
Issues involved:
The determination of the scope of 'input service' in relation to domestic clearances up to March 2008 and on goods cleared for export for the period thereafter. Issue 1: Scope of 'input service' for domestic clearances up to March 2008: The appeal by M/s Apollo Tubes Ltd arose from the reversal of the original authority's decision to drop proceedings initiated in five show cause notices for denial of CENVAT credit availed between February 2005 and December 2010. The issue revolved around the ineligibility of tax paid on utilization of 'goods transportation agency service' for outward movement of manufactured goods. The appellant contended that the first appellate authority erred in ignoring the applicability of a decision of the Hon'ble High Court of Karnataka and the exclusion from reversal afforded by rule 6 of CENVAT Credit Rules, 2004. The Tribunal found that the first appellate authority's reliance on Tribunal decisions over the High Court ruling was contrary to law, thus setting aside the reversal of the original authority's order for the period prior to April 2008. Issue 2: Credit availed for 'outward transportation' on export of goods after March 2008: The eligibility of credit on 'outward transportation' for export goods from March 2009 to December 2010 was contested. The original authority's order indicated that the credit availed related only to freight on export consignments up to the port of shipment. The Tribunal noted that this fact was not contested in the appeal before the first appellate authority. The Tribunal also highlighted the circular clarifications by the Central Board of Excise and Customs regarding the 'place of removal' in the context of export consignments. The matter was remanded back to the first appellate authority for a finding in accordance with the law as settled, as the eligibility of credit on 'outward transportation' for export goods had not been examined by the first appellate authority. Separate Judgment by the Judges: No separate judgment was delivered by the judges in this case.
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