ST: Outward freight for transportation of goods to depots is an 'input service' eligible for credit
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[2013] 38 taxmann.com 181 (Kolkata - CESTAT)
CESTAT, KOLKATA BENCH
Gulf Oil Corpn. Ltd.
v.
Commissioner of Central Excise, Customs & Service Tax-BBSR-II*
DR. D.M. MISRA, JUDICIAL MEMBER
ORDER NO. A/17/KOL./2013
APPEAL NO. ST/40/2008
APPEAL NO. ST/40/2008
JANUARY 30, 2013
Rule 2(l) of the Cenvat Credit Rules, 2004 - CENVAT Credit - Input service - Rent-a-cab/Transportation Services - Period from January, 2005 to June, 2006 - Outward freight for transportation of goods to depots is an 'input service' eligible for credit - Similarly, outward freight (GTA services) for transporting goods from factory to customer's premises is eligible for input service credit in view of judgment in CCE & ST, LTU v. ABB Ltd. [2011] 32 STT 141/12 taxmann.com 57 (Kar.) [Paras 5 & 6] [In favour of assessee]
CASE REVIEW
CCE & S.T., LTU v. ABB Ltd. [2011] 32 STT 141/12 taxmann.com 57 (Kar.) (paras 5 & 6) followed.
EDITOR'S NOTE
Presently, outward freight (GTA services) for transporting goods from factory to customer's premises will be eligible for input service credit only if the place of removal is customer's premises (which is a rare case) in view of the provisions of rule 2(l) of CENVAT Credit Rules, 2004, which provide that credit would be available only "up to" the place of removal.
S.C. Mohanty for the Appellant. A.K. Biswas for the Respondent.
ORDER
1. This is an appeal filed against the order in appeal No. 16/B-II/ST/2007 dated 04.12.2007 passed by the Commissioner (Appeals), Central Excise, Customs & Service Tax, BBSR-II.
2. Briefly stated the facts of the case are that the appellant had availed Cenvat Credit of Service Tax paid on GTA services during the period from January, 2005 to June, 2006 amounting to Rs.7,34,549/-. The said Cenvat Credit was availed in respect of outward freight for direct sales to customers and freight for transportation of goods to their depots treating the same as 'input service' in terms of Rule 2 (l) of the Cenvat Credit Rules, 2004. Show Cause notices were issued proposing denial of Cenvat Credit on GTA service for transferring of goods to their own depots as well as outward freight for transport of goods from factory to the place of the buyers. On adjudication, the demand was confirmed and penalty imposed. Aggrieved, the appellant had filed appeal before the Ld. Commr. (Appeal). The Ld. Commr. (Appeal) has allowed the Cenvat Credit, on the outward freight incurred in transferring the goods to their own depots but rejected the service tax paid on outward freight (GTA services) for transporting the goods from their factory to customer's premises. Aggrieved by the same, the appellant are in appeal.
3. The Ld. Advocate for the appellant had submitted that eligibility to Cenvat Credit on the service tax paid on GTA service (outward freight) as 'input service' for the period prior to 1/4/08 is no more res integra being settled by the Hon'ble High Court of Karnataka in the case of CCE&ST, Ltu v. ABB Ltd. [2011] 32 STT 141/12 taxmann.com 57.
4. Per contra, the Ld. A.R. submitted that the Department has preferred an appeal against the said judgement of the Hon'ble Apex Court. However, he has fairly conceded that no stay has been granted by the Hon'ble Apex Court.
5. I have considered the submissions of both sides and perused the record. I find that the issue regarding availment of CENVAT Credit on outward freight for the period prior to 01.04.2008 has been settled by the Hon'ble High Court of Karnataka in the case of ABB Ltd. (supra) in favour of assessee. I also find that there is no stay against the same. The Hon'ble High Court at para 34 of the said judgement has held as under:
"34. For the reasons, which we have assigned in our order, the final order of the Tribunal is legal and valid. We further make it clear that this interpretation is valid till 1-4-2008. In that view of the matter, but for the aforesaid modification, we do not see any merit in these appeals. The substantial questions of law raised are answered in favour of the assessee and against the revenue."
6. In view of the aforesaid judgement, the impugned order of the Ld. Commr. (Appeals) is set aside to the extent of denying the Cenvat Credit on GTA service, that is, service tax paid on outward freight for clearances of finished goods from the factory to the place of customers and consequently the Appeal filed by the Appellant allowed to this extent. Appeal disposed off in the above terms with consequential relief, if any, as per law.
VINEETRegards
Prarthana Jalan
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