2014 (1) TMI 1160 - AT - Central Excise

Denial of CENVAT credit on GTA service for outward transportation; pre-deposit directive issued

The Tribunal denied the appellant's claim for CENVAT credit on GTA service for outward transportation of final products, citing the definition of 'input ... Denial of CENVAT credit on GTA service - Waiver of Pre-deposit – Held that:- The tenor of the appeal and the submissions of the learned counsel is such that the definition of ‘input service’ as amended with effect from 1.4.2008 has been given a go-by - for the period beyond 31.3.2008, the benefit of CENVAT credit on GTA service used for outward transportation of final products from the place of removal was not admissible to the manufacturer of the final products – the assessee was not to establish prima facie case in their favour – thus, the appellant directed to pre-deposit 50% of the duty – upon such submission rest of the duty to be stayed till the disposal – stay granted. Issues:1. Claim of CENVAT credit on GTA service for outward transportation of final products.2. Interpretation of the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004.3. Nexus between outward transportation of goods and their manufacture and clearance.4. Adequacy of evidence to support the claim.5. Financial hardships plea.6. Requirement of pre-deposit for waiver and stay.Analysis:1. The appellant sought waiver and stay regarding the impugned demand arising from the denial of CENVAT credit on GTA service used for outward transportation of final products. The authorities contended that as per the definition of 'input service' under Rule 2(l) of the CENVAT Credit Rules, 2004, the appellant was not entitled to claim credit for transportation to customers' premises. The appellant argued a firm nexus between transportation and manufacture, citing relevant circulars and court decisions.2. The Additional Commissioner argued that the issue was addressed in a previous Final Order and that the appellant's contentions lacked evidence. The Tribunal noted the lack of evidence supporting the appellant's claim and found that the definition of 'input service' post-1.4.2008 did not support their case, as per the Final Order cited by the Additional Commissioner.3. The Tribunal acknowledged the appellant's assertion of producing evidence before lower authorities but found it lacking. Despite the appellant's arguments, the Tribunal held that the appellant failed to establish a prima facie case on merits due to the absence of evidence and the Final Order's coverage of the issue post-31.3.2008.4. Notably, there was no plea of financial hardships from the appellant, which could have influenced the Tribunal's decision regarding waiver and stay.5. Consequently, the Tribunal directed the appellant to pre-deposit 50% of the duty amount within six weeks and report compliance, with the possibility of waiver and stay on the penalty and the remaining CENVAT credit and interest, subject to the specified conditions.This comprehensive analysis covers the key issues and the Tribunal's detailed reasoning behind the decision in the legal judgment.