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2016 (8) TMI 1064 - CESTAT CHENNAI

2016 (8) TMI 1064 - CESTAT CHENNAI - TMI - Cenvat credit - Service tax paid on outward transportation - Whether the transportation of inputs/semi-finished goods/intermediaries by the appellant assessee to their manufacturing units falls under the ambit of the definition of input service defined in Rule 2(l) of CCR, 2004 or otherwise - Held that:- the decision of the Tribunal in the assessee's own case squarely covers the disputed issue. There cannot be a different view with regard to the eligibi .....

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n the hands of the appellant and the credit can be availed by the respective receiving unit. The impugned order passed by lower authorities are set aside except confirming demand of ₹ 13,848/- representing service tax amount passed on by appellant to the recipient unit. - Decided partly in favour of assessee - E/42021/2014 - Final Order No. 41424/2016 - Dated:- 26-8-2016 - Shri P.K. Choudhary, Judicial Member Shri V. Panchanathan, Advocate, For the Appellant Shri R. Veerabhadra Reddy, JC ( .....

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The appellant herein is Exide Industries Limited, Hosur Unit. Hosur unit transfers inputs/semi-finished/intermediaries to other factories on payment of excise duty. The receiving unit make use of these goods to manufacture finished goods and clears them on payment of duty. The appellant paid the freight on such transfers and availed Cenvat credit of the service tax paid on such transportation. On verification of accounts of the appellant assessee it was noticed that they had taken credit of serv .....

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opriate interest. He also imposed a penalty of ₹ 87,000/- under Rule 15 of CCR, 2004 for contravening the provisions and rules thereunder. On appeal, the Commissioner (Appeals) upheld the order of the adjudicating authority. Aggrieved by this, the appellants are before this Tribunal. 2. Ld. Counsel, Shri V. Panchanathan, Advocate appeared on behalf of the appellant and submitted that the appellants are the manufacturer of batteries and they clear input and semi-finished goods from one fact .....

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cenvat credit. The receiving factory manufactures the finished goods and clears the same on payment of excise duty. The whole issue is Revenue neutral. Hence, availing of credit on GTA services for transfer of inputs to other units by Hosur unit is in order. He further submitted that such GTA services availed are relating to the business of the manufacturer. He further submitted that the credit availed by the appellants is in order as per the provisions of Rules 2 (l) (ii) and 3 (1) of Cenvat Cr .....

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GTA services pertains to the inputs which are removed as such by the appellants. In terms of Rule 3 (5) of the CENVAT Credit Rules, 2004, the appellants are required to reverse the credit availed on such inputs. The appellants did so. It is submitted by the counsel that when there is no provision to include the value of the freight in the case of the inputs removed as such, availing of credit either by the appellants or by the receiving unit, should not make any difference to the Revenue. The i .....

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accounting entry. The appellants in this regard submit that out of the total amount of demand on the alleged GTA services, tax demand of ₹ 13,848/- pertain to service tax paid on the transportation of inputs from the factory of the appellants to the factory of the recipient. As stated supra, since no tax is payable the appellants can avail the credit of duty paid and there cannot be any demand on the credit so availed. In this system of accounting, the appellants transfer the cost pertain .....

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be allowed to avail the credit at their receiving unit. In this view also the entire demand is revenue-neutral. He relies on CBEC's Letter F.No.137/3/2006-CX.4, DT.2.2.2006 wherein the Board has held that in case of goods which are transported from factory to depot and sold from such depot, credit of service paid on transportation of goods from factory upto such depot is eligible. He submits that in the instant case, the facts are similar. The goods are transported from appellant's unit .....

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ide and their appeal allowed. 3. Ld. AR, ShriVeerabhadra Reddy, JC, appeared on behalf of the Revenue reiterated the findings of the adjudicating authority and submitted that the eligibility of the service in question for the purpose of sub-rule (i) of Rule 2 of Cenvat Credit Rules, 2004, is beyond the scope of the said definition as the service used by the appellant assessee in this case relates to outward transportation of inputs/semi-finished goods. Since, they are not returned to the appella .....

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ssed by the adjudicating authority for recovery of ineligible credit availed by the appellant assessee is proper and in accordance with law. Therefore, the impugned order is sustainable. 4. Heard both sides and perused the records. The short issue involved in the case on hand is whether the transportation of inputs/semi-finished goods/intermediaries by the appellant assessee to their manufacturing units falls under the ambit of the definition of input service defined in sub-rule (l) Rule 2 of CC .....

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aw to deny the genuine liability incurred to be allowed as Cenvat credit under reverse charge mechanism, there is no question of depriving the appellant from the Cenvat credit of the service tax paid on the outward transportation. 4. Revenue at this juncture says if appal is allowed that shall defeat the purpose of law since no sale has occurred. It may be stated that Revenue has misconceived the scheme of taxation. Reverse charge mechanism is quite different from the normal taxation under this .....

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n is concerned. I also find from the CBEC letter cited by the counsel that in case of depot sale of goods, credit of service tax paid on the transportation of goods upto such depot would be eligible. The said CBEC's letter dt. 2.2.2006 is reproduced as under :- Letter F.No. 137/3/2006-CX. 4, dated 2-2-2006 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Eligibility of CENVAT credit of service tax paid on goods transpo .....

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The expression place of removal has been defined under Section 4 of the Central Excise Act, as per which it is (a) a factory (in case of factory gate sale); (b) a warehouse (in case goods permitted to be stored without payment of duty); or (c) a depot (in case of depot sale). Therefore, in case excisable goods are sold from depot after their clearance from the factory, the manufacturer is eligible to take credit of service tax paid on transportation of goods up to such depot. 2. In this regard .....

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