2011 (8) TMI 377 - AT - Service Tax

Tribunal applies Karnataka High Court ruling on CENVAT Credit for transportation charges

The Tribunal, after considering arguments and a Stay Petition, applied the Hon'ble Karnataka High Court's decision in the ABB Ltd. Vadodara case to the ... CENVAT Credit - Service Tax on outward transportation - Waiver of pre-deposit - Precedential application of a Larger Bench and High Court decision up to 01.04.08 - Followance of binding precedentWaiver of pre-deposit - Stay petition - Application for waiver of pre-deposit of service tax and penalty - HELD THAT: - The Tribunal considered the stay petition and the request for waiver of pre-deposit in the light of the legal position applicable to the substantive controversy. Having found that the substantive issue was governed by an existing Higher Court decision up to the relevant cut-off date, the Tribunal found no reason to keep the appeal pending and allowed the application for waiver of pre-deposit. The stay petition was disposed of accordingly and the appeal was taken up for final disposal. [Paras 5, 6]Application for waiver of pre-deposit allowed and stay petition disposed of.CENVAT Credit - Service Tax on outward transportation - Precedential application of a Larger Bench and High Court decision up to 01.04.08 - Entitlement to CENVAT credit of Service Tax paid on outward transportation of finished goods for the period up to 31.3.08 - HELD THAT: - The sole substantive question was whether the assessee could claim CENVAT credit of service tax paid on outward transportation from depot/factory to customers. The Tribunal noted that the issue is squarely covered by the Larger Bench decision in M/s ABB Ltd. and that the Hon'ble Karnataka High Court had upheld that decision insofar as credit availed up to 01.04.08. As the disputed period in this appeal extends only up to 31.3.08, the Tribunal applied the binding precedent and concluded that the assessee was entitled to the CENVAT credit for the period in question. Consequently, the impugned order confirming demand was set aside and the appeal allowed with consequential relief. [Paras 2, 5, 6]Assessee entitled to CENVAT credit of Service Tax on outward transportation for the period up to 31.3.08; impugned order set aside and appeal allowed.Final Conclusion: Pre-deposit waived; appeal allowed on merits by applying the Larger Bench and Karnataka High Court decisions insofar as they govern credit up to 01.04.08, and the assessee is held entitled to CENVAT credit of service tax on outward transportation for the period up to 31.3.08. Issues:- Eligibility of Service Tax credit on outward transportation charges- Applicability of the decision of Hon'ble Karnataka High CourtAnalysis:The appeal before the Appellate Tribunal CESTAT, Ahmedabad involved the issue of Service Tax credit availed by the appellant on outward transportation from the depot to the customer's place during the period April 2005 to March 2008. The Revenue contended that the appellant was not eligible for such credit as per Rule 2(l) of CENVAT Credit Rules, 2004. The adjudicating authority had upheld the demand raised along with interest and penalties under various sections of the Finance Act, 1994.The authorized representative of the appellant argued that the issue was covered by an earlier Larger Bench decision of the Tribunal in the case of M/s ABB Ltd. Vadodara, which was upheld by the Hon'ble Karnataka High Court. On the other hand, the Ld. SDR contended that the High Court had only upheld the decision for the credit availed before 1.4.08, leaving the law unsettled for the subsequent period.After considering the arguments and the Stay Petition, the Tribunal found that the judgment of the Hon'ble Karnataka High Court in the case of ABB Ltd. Vadodara would apply to the present case since the issue pertained to CENVAT Credit of Service Tax paid on outward transportation charges until 31.3.08. Consequently, the Tribunal decided to dispose of the appeal at that stage itself.Upon waiver of the pre-deposit, the Tribunal proceeded to examine the appeal for disposal. It was observed that the issue of the eligibility of the assessee for availing CENVAT Credit on Service Tax paid on outward transportation of finished goods was squarely covered by the decision of the Hon'ble Karnataka High Court in the case of ABB Ltd. Vadodara. As the period in question in the present case was up to 31.3.08, which was within the scope of the High Court's judgment, the Tribunal allowed the appeal with consequential relief. The impugned order was set aside, and the appeal was allowed, thereby disposing of the Stay Petition as well.