2012 (7) TMI 223 - AT - Service Tax

Tribunal Grants Relief on Cenvat Credit Dispute

M/s ELKAY TELELINKS Versus COMMISSIONER OF CENTRAL EXCISE, FARIDABAD

The Tribunal allowed the appeal by the appellants, setting aside the demand, interest, and penalty imposed under the Cenvat Credit Rules, 2004. The ... Cenvat credit - outward transportation of goods up to the place of their buyers - supplies made by them to their buyers of FOR destination basis – Held that:- Assessee is eligible for cenvat credit for the period prior to 1.4.2008. Appeal is allowed Issues:- Eligibility for Cenvat credit on service tax paid on outward transportation of goods- Interpretation of input service under Cenvat Credit Rules, 2004- Applicability of Karnataka High Court decision in CCE Vs ABB Ltd case- Adjudication of demand, interest, and penalty under Cenvat Credit Rules, 2004Eligibility for Cenvat credit on service tax paid on outward transportation of goods:The appellants, as manufacturers of excisable goods, availed Cenvat credit under Cenvat Credit Rules, 2004 for service tax paid on outward transportation of goods to their buyers. The Revenue contended that they were not entitled to such credit based on the definition of input service under rule 2(1) of the Cenvat Credit Rules, 2004. A show cause notice was issued to recover an amount and impose a penalty under Rule 15 of the Cenvat Credit Rules, 2004. The adjudication confirmed the demand, interest, and penalty. The Commissioner (Appeals) rejected the appeal filed by the appellants, leading them to approach the Tribunal.Interpretation of input service under Cenvat Credit Rules, 2004:The Counsel for the appellants argued that all supplies to buyers were made on a FOR destination basis. He cited a decision of the Karnataka High Court in the case of CCE Vs ABB Ltd to support their claim for Cenvat credit before 1.4.2008. The Tribunal considered this argument and found merit in the appellant's submission, allowing the appeal and setting aside the impugned order with consequential relief.Applicability of Karnataka High Court decision in CCE Vs ABB Ltd case:The Counsel for the appellants relied on a specific decision of the Karnataka High Court in the case of CCE Vs ABB Ltd to establish the eligibility for Cenvat credit prior to 1.4.2008. This legal precedent played a crucial role in the Tribunal's decision to grant relief to the appellants and overturn the adverse orders issued against them.Adjudication of demand, interest, and penalty under Cenvat Credit Rules, 2004:The Revenue's contention regarding the ineligibility of the appellants for Cenvat credit on service tax paid on outward transportation of goods led to the issuance of a show cause notice, demanding recovery and imposing penalties under the Cenvat Credit Rules, 2004. However, the Tribunal, after considering the arguments presented and legal precedents cited, allowed the appeal by the appellants, thereby setting aside the impugned order and providing them with consequential relief.