Tribunal grants CENVAT credit for outward transportation, overturning denial. Precedents and Circular supported appellant's case.

The Tribunal allowed the appeal, overturning the denial of CENVAT credit on outward transportation of goods. Relying on precedents and Circular No. 97/8/2007-S.T., the Tribunal held that outward transportation qualified as an input service for manufacturing final products. The appellant's arguments, supported by case law and past approvals within the company, were deemed valid. The impugned order was found unsustainable, leading to its setting aside and any necessary consequential relief granted to the appellant.

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Issues:
Denial of CENVAT credit on outward transportation of goods.

Analysis:
The appeal challenged an order rejecting the appellant's appeal and upholding the Order-in-Original regarding the denial of CENVAT credit on outward transportation of goods. The appellant, engaged in manufacturing commercial vehicles and spare parts, procured spare parts from vendors paying excise duty and imported parts with CVD duty. The Department issued a notice to recover CENVAT credit of service tax on outward transportation of spare parts, contending it did not qualify as an input service for manufacturing final products. The Additional Commissioner confirmed the demand, leading to the appeal.

The appellant argued that they fulfilled conditions outlined in Circular No. 97/8/2007-S.T., allowing CENVAT credit on outward transportation. They cited various cases supporting their position and highlighted that other units of the appellant had been allowed such credit. The appellant contended that outward transportation was covered under the definition of input services, as it related to business activities. The Revenue, however, argued that outward transportation did not qualify as an input service under Rule 2(l)(iii) of the CENVAT Credit Rules, as it was used in sales activities, not manufacturing.

Upon review, the Tribunal found the issue of denial of CENVAT credit on outward transportation to be well-established in favor of the appellants based on previous judgments. Citing the precedents, the Tribunal concluded that the impugned order was unsustainable in law. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and providing any consequential relief deemed necessary.

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