TMI BlogInputs lost during manufacturing does not amount to receipt of Inputs in short quantity and accordingly whatever tax has been paid by Assessee on Inward Transportation service is entitled for Input Service creditX X X X Extracts X X X X X X X X Extracts X X X X ..... Inputs lost during manufacturing does not amount to receipt of Inputs in short quantity and accordingly whatever tax has been paid by Assessee on Inward Transportation service is entitled for Input Service credit - By: - Bimal jain - Service Tax - Dated:- 4-12-2014 - - Dear Professional Colleague, Inputs lost during manufacturing does not amount to receipt of Inputs in short quantity a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly whatever tax has been paid by Assessee on Inward Transportation service is entitled for Input Service credit We are sharing with you an important judgement of the Hon ble CESTAT, Mumbai, in the case of Mahanagar Gas Ltd. Vs. Commissioner of Central Excise, Mumbai-V [ 2014 (12) TMI 117 - CESTAT MUMBAI ] on following issue: Issue: Whether Cenvat cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit could be denied on Inward Transportation service availed for transportation of Inputs on the ground of shortage of Inputs? Facts and background: Mahanagar Gas Ltd. ( the Appellant ) was procuring gas from Gas Authority of India Ltd. ( GAIL ) through pipelines and the same was supplied through petrol pumps or through pipelines to the consumers. The Appellant was availin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Cenvat credit on Inputs and on Inward Transportation service and was paying duty on their final product. At the end of the year, the Appellant maintained a Balance Sheet and an account for Measurement Tolerance in their Balance Sheet showing shortage of gas lost during the supply as final product. The Revenue contended that since the shortage has occurred of Inputs, consequently the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put Service credit on transportation of such shortage Inputs stands denied to the Appellant. Accordingly, proceedings were initiated and demand was confirmed against the Appellant. Being aggrieved, the Appellant preferred an appeal before the Hon ble CESTAT, Mumbai and submitted that Cenvat credit on Inputs have not been denied on account of shortages but Input Service credit on transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of these inputs have been denied by the Department which is not permissible. Moreover, the Measurement Tolerance has occurred on account of receipt of Inputs and supply of final products. In these circumstances, whatever shortage may occur that may be lost during the process of manufacturing. Therefore, Cenvat credit cannot be denied. Held: The Hon ble CESTAT, Mumbai held that when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no dispute regarding receipt of Inputs, therefore, whatever transportation has been paid by the Appellant on Inward Transportation service are entitled for Input Service credit. It was further held that the Measurement Tolerance is on account of receipt of Inputs and supply of final products and in these terms, it cannot be said that the Appellant have received the Inputs in short quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Therefore, the Appellant is rightly entitled for full Cenvat credit of Service tax paid on Inward Transportation service. Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us. Thanks and Best Regards. Bimal Jain FCA, FCS, LLB, B.Com (Hons) Flat No. 34B, Ground Floor, Pocke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t - 1, Mayur Vihar, Phase - I, Delhi 110091, India Desktel: +91-11-22757595/ 42427056 Mobile: +91 9810604563 Email: bimaljain@hotmail.com Web: www.a2ztaxcorp.com Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions herein is not ruled out. 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