Appeal Allowed: Cenvat Credit Granted for Service Tax on Goods Transportation

The Member (Judicial) allowed the appeal in favor of the appellant, setting aside the denial of Cenvat Credit on service tax paid for goods transportation between units. The judgment emphasized that even if the service tax payment was not mandatory, the appellant's payment entitled them to claim the credit. Referring to relevant case law, the Member concluded that the appellant was within their rights to claim the credit for the tax paid.

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Issues:
- Appeal against denial of Cenvat Credit on service tax paid for transportation of goods between units.

Analysis:
1. The appellant appealed against the denial of Cenvat Credit by the Commissioner (Appeals) for paying service tax on goods transport from Allahabad to Kalher unit and claiming credit in the Bhiwandi unit. The authorities rejected the credit citing Rule 2(l) of Cenvat Credit Rules 2004, stating credit can only be availed for input services used in manufacturing final products or clearance. The appellant argued that since they paid the service tax, credit should be allowed. They contended that activities between units are internal, making the appellant both service provider and recipient, hence credit is admissible.

2. The appellant's counsel relied on judgments like Bajaj Allianz General Insurance Co. Ltd. and others to support their claim that even if no service is involved or if service tax is erroneously paid, the excess tax paid can be claimed as Cenvat Credit. On the other hand, the Revenue argued that the service tax on GTA service was not received by the appellant, thus not meeting the criteria for input service as defined in the Cenvat Credit Rules.

3. The Member (Judicial) analyzed the arguments and cited the judgments referred by the appellant's counsel to support the appellant's entitlement to Cenvat Credit. Referring to cases like Bajaj Allianz and Sterlite Industries, the Member concluded that even if the service tax was not required to be paid, if paid, it can be claimed as credit. The Member emphasized that since the service tax was already paid by the Allahabad unit, the appellant was not obligated to pay it again, making the credit admissible.

4. Consequently, the Member set aside the impugned order and allowed the appeal in favor of the appellant. The judgment highlighted that the appellant's payment of service tax, even if not mandatory, entitles them to claim Cenvat Credit. The decision was pronounced on 25/04/2016.

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