2009 (7) TMI 608 - AT - Service Tax

Cenvat Credit- The respondents are engaged in the manufacture of Iron and Steel Castings, dutiable and exempted goods. The Original Authority denied Cenvat credit on the services tax paid on GTA used on the transportation of procurement of the raw material, used in the manufacture of exempted and dutiable goods. Further, Cenvat credit on Service Tax of GTA was denied on removal of inputs as such. The Commissioner (Appeals) set aside denial of credit. Hence, revenue filed this appeal. In the light of the decision of Chitrakoot Steel & Power (P.) Ltd. v. CCE 2008 -TMI - 3795 - CESTAT, CHENNAI, where as held that- the credit availed inputs or capital goods are removed from the factory of the assessee, sub-rule (5) of rule 3 of the Cenvat Credit Rules, 2004 provides for recovery of equal amount of credit. There is no such provision to reverse credit of service tax availed in relation to such inputs or capital goods when removed from the factory. Moreover, rule 14 of the Cenvat Credit Rules, 2004 provides for recovery of Cenvat credit availed or utilised wrongly. In the instant case, the appellants had taken the credit correctly in terms of the statutory provisions, held that- there is no reason to interfere the order of the Commissioner (Appeals). Accordingly, the appeal filed by the revenue is rejected.

Summary

The Appellate Tribunal CESTAT, New Delhi, delivered a judgement in 2009 denying Cenvat credit on services tax paid on goods transportation agency (GTA) services used in the manufacturing of iron and steel castings. The Commissioner (Appeals) set aside the denial of credit, leading the revenue to file an appeal. The revenue argued that Cenvat credit should not be allowed on inputs used in the manufacture of exempted goods, and that the respondents should reverse credit of service tax on GTA on removal of inputs as such. The respondents contended that the taxable service was not used exclusively in the manufacture of exempted goods. The Tribunal supported the findings of the Commissioner (Appeals) and referenced a previous decision to conclude that there is no provision for reversing credit of service tax on input services when inputs are removed from the factory. Ultimately, the appeal filed by the revenue was rejected by the Tribunal. The judgement highlights the importance of understanding the specific rules and regulations governing Cenvat credit and input services to determine eligibility for tax credits.