2018 (4) TMI 850 - AT - Service Tax

Tribunal Remands Appeals for Reconsideration on Cenvat Credit Admissibility

The Tribunal allowed both appeals by way of remand, emphasizing the need for a thorough reconsideration by the Appellate Authority in light of the various ... Admissibility of Cenvat credit on inward freight for purchase of motor vehicles - Input service credit under Goods Transport Agency services - Availability of credit for trading activities - Remand for reconsideration in light of precedentAdmissibility of Cenvat credit on inward freight for purchase of motor vehicles - Input service credit under Goods Transport Agency services - Availability of credit for trading activities - Remand for reconsideration in light of precedent - Impugned orders denying Cenvat credit set aside and matters remanded to the Appellate Authority for fresh consideration in light of competing Tribunal decisions. - HELD THAT: - The appellants purchased motor vehicles from manufacturers and paid service tax on inward freight, availing input service credit under Goods Transport Agency services, which they utilised for payment of service tax on authorised service-station outputs. Revenue challenged the admissibility of such Cenvat credit on the ground that it related to trading activities and denied credit. The appellants relied on Tribunal decisions allowing credit for transportation of vehicles from factory to showroom, while Revenue relied on a later Tribunal decision which took a different view. The Bench observed that the Commissioner (Appeals) had not considered the rival Tribunal precedents, including the distinction urged regarding periods and indigenous versus imported vehicles. In these circumstances the appropriate course is to set aside the impugned orders and remand the matters to the Appellate Authority for reconsideration taking into account the referred decisions of the parties.Impugned orders set aside; appeals remitted to the Appellate Authority for fresh adjudication in accordance with the observations and on consideration of the rival Tribunal decisions.Final Conclusion: Both appeals allowed to the extent that the impugned orders are set aside and the matters are remanded to the Appellate Authority for fresh consideration in light of the competing Tribunal precedents referred to by the parties. Issues:1. Admissibility of Cenvat credit on service tax paid on transportation of vehicles.2. Utilization of input service credit for payment of service tax on output services.3. Interpretation of Tribunal decisions regarding credit for transportation of vehicles.Analysis:Issue 1: The main issue in this case was the admissibility of Cenvat credit on service tax paid on the transportation of vehicles from the manufacturer's premises to the appellant's premises. The Revenue contended that the credit was not admissible as it related to trading activities. However, the appellants argued that they were entitled to the credit based on previous Tribunal decisions allowing such credits.Issue 2: The appellants were utilizing the input service credit availed under Goods Transport Agency Services for payment of service tax on the output services provided by them at their service station for servicing the motor vehicles. This raised the question of whether the credit could be legitimately utilized in this manner.Issue 3: The Tribunal referred to previous decisions such as CCE, Tirupathi vs. Shariff Motors and Badrika Motors (P) Ltd. vs. CCE & ST, Bhopal, where credits for transportation of vehicles were allowed. However, the Revenue pointed to a more recent decision in SKF India Ltd. vs. CCE, Pune, which might have implications for the current case. The Tribunal decided to remand the matter to the Appellate Authority for reconsideration in light of these conflicting decisions.In conclusion, the Tribunal allowed both appeals by way of remand, emphasizing the need for a thorough reconsideration by the Appellate Authority in light of the various Tribunal decisions cited by both parties. The decision highlighted the importance of considering the specific circumstances and relevant legal precedents in determining the admissibility of Cenvat credit in cases involving the transportation of vehicles.