2011 (7) TMI 463 - AT - Service Tax

Waiver of predeposit - Rule 2(1)(ii) of the Cenvat Credit Rules 2004 - outward transport the goods sold through depots/consignment agents or at customers promises - There is no dispute that the freight charges have been included in the value of the goods cleared from the factory premises of the appellants. We are of the considered view that the appellants have made out a prima-facie case for waiver of predeposit of the amounts involved - The application for waiver of predeposit of amounts involved is allowed and recovery thereof stayed during pendency of the appeal.

Summary

Issues:
Waiver of predeposit of amount, eligibility for Cenvat credit on service tax paid on outward transport, interpretation of Rule 2(1)(ii) of the Cenvat Credit Rules, 2004, relevance of High Court judgments on similar cases.

Analysis:
The judgment addressed an application seeking waiver of predeposit of a substantial amount along with interest and penalty. The adjudicating authority had disallowed Cenvat credit on service tax paid on outward transport of goods sold through depots/consignment agents or at customers' premises, citing Rule 2(1)(ii) of the Cenvat Credit Rules, 2004.

The counsel for the appellants relied on two High Court judgments, specifically mentioning the case of M/s ABB Ltd. & others decided by the Karnataka High Court and the case of Gujarat Ambuja Cements Ltd. Vs. CCE, Ludhiana. The counsel argued that the appellants had already paid Central excise duty on the value inclusive of freight charges up to the depots/consignment agents and customer places.

Upon reviewing the submissions and the cited judgments, the tribunal found that the issue at hand had been settled by the aforementioned High Court decisions. It was acknowledged that the freight charges had been factored into the value of goods cleared from the factory premises by the appellants. Consequently, the tribunal concluded that the appellants had established a prima facie case for the waiver of predeposit of the amounts in question. As a result, the application for waiver was granted, and the recovery of the amounts was stayed pending the appeal process.

This judgment highlights the significance of legal precedents in resolving disputes related to the interpretation and application of tax laws, specifically concerning the eligibility for Cenvat credit and the inclusion of freight charges in the valuation of goods for tax purposes. The decision underscores the importance of citing relevant case law to support legal arguments and demonstrates the tribunal's willingness to consider established legal principles in rendering judgments.