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2009 (7) TMI 868 - AT - Service TaxCenvat credit - Any material if used for producing or processing of any goods or and for bringing about any change in any substance for the manufacturer of final product would be capital goods and therefore qualify for availing cenvat credit - From the Clause (iv) of the said Rule, it is clear that for availing cenvat as capital goods the only requirement is that they should be used in the factory of production As regards the second issue, the same is now covered in favour of the assessee by the Larger Bench decision of the Tribunal in the case of ABB Limited & Ors reported in (2009 -TMI - 34139 - CESTAT, BANGALORE), laying down that credit on service tax paid on outward transportation of the final products is available to the assessee - Decided in favor of the assessee
Issues:
1. Eligibility of credit of service tax on outward transportation charges. 2. Classification of Ceramic Beads as capital goods for availing MODVAT credit. Analysis: Issue 1: Eligibility of credit of service tax on outward transportation charges The appellate authority upheld the eligibility of the assessee for availing credit on service tax paid on outward transportation of final products. This decision was based on the precedent set by the Larger Bench decision of the Tribunal in the case of ABB Limited & Ors. The Tribunal's ruling established that the credit on service tax for outward transportation of final products is indeed available to the assessee. Consequently, the appeal filed by the Revenue on this issue was rejected. Issue 2: Classification of Ceramic Beads as capital goods for availing MODVAT credit Regarding the classification of Ceramic Beads as capital goods for availing MODVAT credit, the Commissioner (Appeals) reasoned that the beads, although not consumed in the manufacture of goods, played a crucial role in the manufacturing process by acting as a hammer. As per the Commissioner's interpretation, any material used in the production or processing of goods qualifies as capital goods if it brings about a change in any substance for the final product's manufacture. The Commissioner concluded that Ceramic Beads met the criteria for capital goods under the relevant Rule, as they were used in the factory of production. Consequently, the respondent was deemed to have correctly availed MODVAT on Ceramic Beads. The appellate authority found no fault in the Commissioner's reasoning and upheld this part of the order. In summary, the judgment by the Appellate Tribunal CESTAT, Ahmedabad addressed two key issues related to the eligibility of credit of service tax on outward transportation charges and the classification of Ceramic Beads as capital goods for availing MODVAT credit. The decision favored the assessee on both counts, affirming their right to credit on service tax for outward transportation and acknowledging Ceramic Beads as capital goods eligible for MODVAT credit.
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