Outward GTA credit and intra-factory exemption under Notification 67/95-C.E. were sustained on settled legal principles.

Cenvat credit on GTA services used for outward transport of finished goods was held admissible for the period before 1-4-2008, following the settled position in ABB Ltd. and the then-applicable input service definition. The discussion also states that Notification No. 67/95-C.E. applies to tools, dies and fixtures manufactured and used within the same factory, and that ownership or the raising of a commercial invoice does not by itself create duty liability where intra-factory manufacture and use are undisputed. On that basis, the Revenue's challenge failed and exemption was available on the tools, dies and fixtures.

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Issues: (i) Whether Cenvat credit of service tax paid on GTA services for outward transportation of finished goods was admissible for the period prior to 1-4-2008; (ii) Whether duty was payable on tools, dies and fixtures and whether Notification No. 67/95-C.E., dated 16-3-1995 was applicable where the goods were manufactured and used in the same factory.

Issue (i): Whether Cenvat credit of service tax paid on GTA services for outward transportation of finished goods was admissible for the period prior to 1-4-2008.

Analysis: The issue stood covered by the decision of the Karnataka High Court in ABB Ltd. and, for the period involved, the amended definition of input service was not applicable. The view already settled on outward transportation, therefore, governed the dispute.

Conclusion: Cenvat credit on GTA services was admissible and the Revenue's challenge on this issue failed.

Issue (ii): Whether duty was payable on tools, dies and fixtures and whether Notification No. 67/95-C.E., dated 16-3-1995 was applicable where the goods were manufactured and used in the same factory.

Analysis: Notification No. 67/95-C.E. exempts capital goods manufactured in a factory and used within the factory of production. The notification does not make exemption dependent on ownership, and mere raising of a commercial invoice does not create a duty liability. Since the Revenue did not dispute that the goods were manufactured and used in the same factory, the exemption applied.

Conclusion: No duty was payable on the tools, dies and fixtures and the exemption under Notification No. 67/95-C.E. was available.

Final Conclusion: The Revenue appeal was rejected and the relief granted to the assessee was sustained.

Ratio Decidendi: Where an exemption notification for capital goods turns on manufacture and use within the same factory, ownership or invoicing alone does not defeat the exemption; and, for the relevant pre-amendment period, outward GTA service credit remained admissible on the settled law.

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