2015 (2) TMI 793 - AT - Central Excise

Appellant wins appeal for CENVAT Credit on outward transport charges

M/s. TK Warana SSK Ltd. Versus Commissioner of Central Excise, Kolhapur

The Tribunal ruled in favor of the appellant, a sugar manufacturer, allowing their appeal and confirming their entitlement to CENVAT Credit on outward ... Input services- Wrongly availed Cenvat credit of service tax paid on outward and inward freight- Held that:- Having considered the rival contentions and the grounds of appeal, I find that the CENVAT Credit of services availed by the manufacturer is available from the place of removal, which in the appellant's case herein is railway station on the goods have been sold on FOR basis and Port at which goods have sold at FOB basis. Further, I find that the findings of facts are in favour of the appellant to the effect that the appellant have satisfied the three conditions specified in the Circular. Further, I agree with the appellant that the Hon'ble Gujarat High Court in the case of Inductotherm India Pvt. Ltd.[2014 (3) TMI-921 (Guj. HC)] has held that in case of export of Cargo Handling Services, the Service Tax paid thereon is available as input services, as in such case, the place of removal is Port. Appeal allowed in favour of appellant. Issues:1. Availment of CENVAT Credit on outward transport charges.2. Interpretation of Rule 15 of Cenvat Credit Rules, 2004.3. Applicability of Circular No. 97/8/07-Service Tax.4. Comparison with relevant case laws.5. Jurisdictional authority's findings and appellate decisions.Analysis:1. Availment of CENVAT Credit on outward transport charges:The case involved the appellant, a sugar manufacturer, availing CENVAT Credit for outward transport charges paid for delivering sugar from the factory to the railway station and port of export. The issue was whether these charges qualified as input services under Rule 2(l) of the Cenvat Credit Rules, 2004.2. Interpretation of Rule 15 of Cenvat Credit Rules, 2004:The appellant contended that the definition of input services under Rule 2(l) includes services availed up to the place of removal, which, in their case, extended to the railway station and port of export. The dispute centered on whether the transportation charges were covered under this definition.3. Applicability of Circular No. 97/8/07-Service Tax:The appellant relied on Circular No. 97/8/07-Service Tax to support their claim for CENVAT Credit on transportation charges. The circular was crucial in establishing the conditions under which such credit could be availed.4. Comparison with relevant case laws:The appellant cited precedents, including the rulings of the Tribunal in the cases of Menon Pistons Ltd. and Palco Metals Ltd., to strengthen their argument regarding the eligibility of CENVAT Credit on outward transport charges. Additionally, the appellant referenced the decision of the Hon'ble High Court of Karnataka in the case of ABB Ltd.5. Jurisdictional authority's findings and appellate decisions:The Dy. Commissioner initially adjudicated the show-cause notice, upholding the demand for CENVAT Credit and imposing penalties. The Commissioner (Appeals) affirmed this decision, except for allowing credit for the removal of press-mud. The appellant challenged these decisions before the Tribunal, arguing that they had met the conditions specified in the Circular dated 23.8.2007.In the final judgment, the Tribunal, led by Anil Choudhary, considered the arguments presented by both parties. The Tribunal found in favor of the appellant, holding that the transportation charges incurred for the removal of goods till the railway station or port qualified for CENVAT Credit. The Tribunal distinguished the case from the ruling of the Hon'ble Kolkata High Court in Versuvious India Ltd. and emphasized the relevance of the Circular issued by the Board. The judgment also referenced the decision of the Hon'ble Gujarat High Court in Commissioner of Central Excise Vs. Inductotherm India Pvt. Ltd. to support the appellant's claim for CENVAT Credit on outward transport charges related to export of Cargo Handling Services.In conclusion, the Tribunal allowed the appeal in favor of the appellant, setting aside the impugned order and confirming their entitlement to CENVAT Credit on transportation charges/freight incurred for the removal of goods. The stay petition was also disposed of by the Tribunal.