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of <h1>Manufacturers can claim Cenvat credit for outward transportation beyond place of removal</h1> <h3>COMMR. OF CUS. & C. EX., HYDERABAD-III Versus GREY GOLD CEMENTS LTD.</h3> COMMR. OF CUS. & C. EX., HYDERABAD-III Versus GREY GOLD CEMENTS LTD. - 2014 (34) S.T.R. 809 (A. P.) Issues involved:- Interpretation of Rule 2(l)(ii) of the CENVAT Credit Rules, 2004 regarding the eligibility of Cenvat credit for service tax paid on outward transportation of final products.- Whether services availed for outward transportation beyond the place of removal can be considered as 'input service' for Cenvat credit.- Application of Board Circular dated 2-2-2006 in determining eligibility for Cenvat credit.- Comparison with the Gujarat Ambuja case and the judgment of the High Court of Punjab and Haryana.- Consideration of OECD guidelines and the observations of the Supreme Court in All India Federation of Tax Practitioners v. Union of India.Analysis:The case involved appeals under Section 35G of the Central Excise Act, 1944, against a common order of the Customs, Excise and Service Tax Appellate Tribunal. The Tribunal had held that services availed for outward transportation of final products beyond the place of removal should be treated as 'input service' under Rule 2(l)(ii) of the CENVAT Credit Rules, 2004, allowing the manufacturer to claim Cenvat credit for the service tax paid on such transportation. The dispute arose when the Revenue disallowed the manufacturer's claim for input tax credit on transportation of goods beyond the place of removal. The Commissioner (Appeals) had allowed the appeals based on a Board Circular, stating that credit of service tax paid on transportation of goods up to a depot would be eligible for Cenvat Credit.The Revenue appealed to the Tribunal, questioning whether outward transportation of final products beyond the place of removal qualifies as an 'input service' for Cenvat credit. The Tribunal, in line with the High Court of Punjab and Haryana's judgment in the Gujarat Ambuja case, agreed with the appellate authority's decision. It also considered the Board Circular, OECD guidelines, and the Supreme Court's observations in All India Federation of Tax Practitioners v. Union of India. The Tribunal emphasized that denying CENVAT credit for transportation services would shift the tax burden from the consumer to the business, contrary to the fundamental concept of Service Tax.Ultimately, the Tribunal dismissed the appeals, stating that no substantial question of law arose for consideration. The judgment reaffirmed the eligibility of manufacturers to claim Cenvat credit for service tax paid on outward transportation of final products beyond the place of removal, in accordance with Rule 2(l)(ii) of the CENVAT Credit Rules, 2004.
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