2016 (10) TMI 793 - AT - Service Tax

Revenue appeal dismissed, Cenvat credit allowed for input services under Rule 4(7)

Commissioner of Customs, Central Excise & Service Tax, Allahabad. Versus M/s Kesarwani Zarda Bhandar

The appeal filed by the Revenue challenging the Order-in-Appeal No. 105/ST/ALLD/2013 regarding Cenvat credit on GTA services was dismissed by the ... Denial of CENVAT credit - GTA Services - service tax on freight not paid by Supplier but is paid by respondent who is availing the CENVAT credit - whether the claiming of CENVAT credit by the respondent who is purchaser of goods, justified? - Held that: - as the Service Tax is to be paid under Rule 4(7) and challan is a document for taking credit under Rule 9 of CCR, and the Service Tax is payable for GTA Services under Rule 2 (1) (d) (v) of the Service Tax Rules,1994 by consignor/consignee being manufacturer. Thus, Cenvat credit has rightly been availed - appeal dismissed - decided against Revenue. Issues:1. Appellant challenging Order-in-Appeal No. 105/ST/ALLD/2013 regarding Cenvat credit on GTA services.Analysis:The Appellate Tribunal CESTAT ALLAHABAD heard an appeal by the Revenue against Order-in-Appeal No. 105/ST/ALLD/2013 dated 07-11-2013. The case involved M/s Kesarwani Zarda Bhandar, engaged in manufacturing Branded Chewing Tobacco classified under Tariff item No. 24039910. They were availing Cenvat credit on inputs and input services, including GTA services on which they paid Service Tax as recipients. The issue arose when it was discovered that the freight on goods received by the appellant was being paid by the manufacturer/supplier, but the Service Tax on the freight was being paid by the appellant. This raised a question regarding the compliance with CENVAT Credit Rules, 2004, specifically Rule 4(7) which requires payment of both the value of the service and the service tax for availing Cenvat credit on input services.Upon hearing the parties and considering the contentions, the Tribunal analyzed the relevant provisions. It was noted that under Rule 4(7) of the CENVAT Credit Rules, 2004, Cenvat credit for input services is allowed only after payment is made for both the value of the input service and the service tax. The Tribunal highlighted that the challan is a crucial document for taking credit under Rule 9 of CCR, and Service Tax for GTA services is payable by the consignor/consignee who is the manufacturer. In this case, as the Service Tax was paid but not the value of the input service, the Tribunal concluded that the Cenvat credit had been rightly availed. Consequently, the appeal filed by the Revenue was dismissed, and the C.O. stood allowed.In conclusion, the judgment addressed the issue of compliance with CENVAT Credit Rules, 2004 concerning the payment of both the value of the service and the service tax for availing Cenvat credit on input services, ultimately ruling in favor of the appellant based on the specific provisions and requirements outlined in the rules and regulations.