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TMI Blog2011 (9) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... are manufacturers of excisable goods falling under Chapter 72 and 84 of the Central Excise Tariff. They availed CENVAT credit of service tax paid on goods transportation service in respect of outward transportation of goods from their factory to the customer s premises. The department sought to deny the credit on the same on the ground that outward transportation service cannot be considered as an input service for the appellant for the reason that the appellant has not included the freight amount paid to GTA in the assessable value of the final product for discharging duty. Accordingly, the department disallowed CENVAT credit amounting to Rs.1,76,314/- for the period April to June 2007, Rs.1,42,007/- for the period July to September 2007, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, CENVAT credit on such services is eligible to be taken by the manufacturer. The larger bench has further held that for admissibility to credit on outward transportation, there is no requirement that the cost of freight should enter into the transaction value of the manufactured goods. The Larger Bench also held that service tax being in the nature of consumption tax, if CENVAT credit is disallowed on outward transportation, it becomes a tax on business rather than a tax on consumption. The above decision of the Larger Bench was upheld by the Hon'ble High Court of Karnataka in CCE vs. ABB Ltd. 2011 (23) STR 97 wherein the Hon'ble High Court held that the order passed by the Tribunal is legal and valid till 1.4.2008 when the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f input service and is to that extent contrary to the legislative intention and therefore unsustainable in law. Therefore, the appellate Commissioner s order is not sustainable in law for the period after 1.4.2008 unless the appellant satisfies all the conditions prescribed in the Board circular dated 23.8.2007 and accordingly the departmental appeal is partly allowed. However, the CENVAT credit allowed in the corresponding order in original dated 30.7.2009 to the extent of Rs.71,514/- has to be upheld. Since the mater relates to interpretation of the statutory provisions penalty is not warranted and accordingly, penalty of Rs.2000/- imposed on the appellant is set aside. The appeals are disposed of in the above terms. (Operative pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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