2014 (1) TMI 996 - AT - Central Excise

Tribunal upholds denial of Cenvat credit on tube lights but allows Service Tax credit on outward freight.

The Tribunal upheld the denial of Cenvat credit on tube lights as capital goods due to incorrect classification by the supplier, dismissing the ... Availment of CENVAT Credit - Credit on the “tube lights” as capital goods falling under CETSH No. 9405 10 90 of the Central Excise Tariff Act, 1985 - Goods Transport Agency - Held that:- seller has specifically classified the items under Chapter 94 showing as “Tube Light Fittings”. Nothing is on record to indicate that the appellant received fittings and not Tube Light. I find that the appellant herein cannot avail Cenvat credit of item under the head of capital goods, as goods procured are classified by seller under Chapter 94 - issue of availment of Cenvat credit of outward transportation, Service Tax paid up to 31-3-2008 is correct, as the input service definition - Following decision of CCE, Bangalore v. Madras Cements Ltd. [2010 (8) TMI 288 - KARNATAKA HIGH COURT] - Decided partly in favour of assessee. Issues:1. Availment of Cenvat Credit on tube lights as capital goods.2. Eligibility of Service Tax paid on outward freight as input service.Analysis:Issue 1: Availment of Cenvat Credit on tube lights as capital goods:The appellant had wrongly taken Cenvat Credit on tube lights as capital goods under CETSH No. 9405 10 90 of the Central Excise Tariff Act, 1985. The audit revealed discrepancies in the credit availed from invoices issued by a supplier. The appellant argued that tube lights were essential for their factory premises due to highly inflammable inputs used. However, the seller had classified the items under Chapter 94, making them ineligible for Cenvat credit as capital goods. The appellant's contention that the fittings should be considered as accessories was rejected, citing the supplier's classification. The Tribunal upheld the lower authority's decision, denying Cenvat credit on tube lights.Issue 2: Eligibility of Service Tax paid on outward freight as input service:The audit also highlighted the appellant's availing of Service Tax credit on outward freight for transportation of goods from the factory gate to the buyer's premises. The appellant argued that the credit was eligible, referencing a Tribunal case. The Departmental Representative contested this, citing changes in the definition of credit of input service and the period in question. The Tribunal referred to a previous case where it was established that the buyer's premises could be considered the place of removal. Based on this precedent and the relevant Circular, the Tribunal allowed the appellant's appeal regarding the Cenvat credit of Service Tax paid on outward transportation up to 31-3-2008.In conclusion, the Tribunal dismissed the appeal regarding Cenvat credit on tube lights but allowed the appeal concerning the Service Tax credit on outward transportation up to 31-3-2008, in line with established legal interpretations and precedents.