Appellant entitled to CENVAT Credit for transportation costs; penalty set aside The Tribunal held that the appellant, despite the Supreme Court judgment in Ultratech Cement Ltd, acted in good faith based on the Circular and was ...
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Appellant entitled to CENVAT Credit for transportation costs; penalty set aside
The Tribunal held that the appellant, despite the Supreme Court judgment in Ultratech Cement Ltd, acted in good faith based on the Circular and was entitled to CENVAT Credit for outward transportation during the relevant period. The demand for the extended period was set aside, while the demand for the normal period was upheld. The penalty under Section 11AC was also set aside due to the appellant's lack of mala fide intention. The Tribunal rejected the appellant's argument for adjusting the CENVAT Credit based on the final assessed position of the final product, as no benefit could be derived from it.
Issues involved: Whether the appellant is entitled to CENVAT Credit for outward transportation during April 2011 to March 2016.
Analysis: The appellant argued that as per the Supreme Court judgment in Ultratech Cement Ltd, the demand for CENVAT Credit reversal on outward transportation is not sustainable. They relied on Board Circular No. 97/8/2007-ST and claimed entitlement to the credit based on the interpretation of the Circular. The appellant contended that they acted in good faith based on the Circular and that the extended period for demand is time-barred due to the prevailing Circular during the relevant period.
The Revenue argued that the extended period for demand is valid as the appellant did not disclose the wrongful availing of credit for outward transportation, which was detected by Audit. They contended that the Circular was not correctly interpreted, and the demand is not time-barred due to the amendment in the definition of input service from 1.4.2008.
The Tribunal noted that the Circular allowed credit on outward transportation if certain criteria were met, including the risk of loss or damage being borne by the seller until delivery at the buyer's place. The Tribunal found that the appellant fulfilled the criteria as the sale was on FOR basis, and the risk was on the buyer. Despite the Supreme Court judgment in Ultratech Cement Ltd, the Tribunal held that the appellant acted in good faith based on the Circular and was entitled to the credit during the relevant period. Therefore, the demand for the extended period was set aside, while the demand for the normal period was upheld.
Regarding the penalty under Section 11AC, the Tribunal ruled that since the appellant had no mala fide intention, the penalty was not sustainable and was set aside for the entire period.
The Tribunal disagreed with the appellant's argument of adjusting the CENVAT Credit based on the final assessed position of the final product, as the assessment had attained finality with no disputes. Therefore, no benefit could be derived from the final assessed position for the adjustment of separate credit on outward transportation.
In conclusion, the Tribunal partially allowed the appeal, modifying the impugned orders accordingly.
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