2019 (4) TMI 1347 - AT - Service Tax

Tribunal denies CENVAT Credit for outward transportation services; appellant's claim dismissed.

The Tribunal upheld the disallowance of Input Service Credit for outward transportation services, following the Supreme Court's interpretation in a ... CENVAT Credit - input services - container services used for outward transportation of the final products upto the place of buyer - HELD THAT:- The issue in dispute in the present case is squarely covered by the judgment of the Hon’ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent. Appeal dismissed - decided against Revenue. Issues Involved:1. Disallowance of Input Service Credit for outward transportation services.2. Interpretation of Rule 2(l) of the CENVAT Credit Rules, 2004.3. Applicability of the Supreme Court judgment in CCE&ST vs. Ultra Tech Cement Ltd.Issue-wise Detailed Analysis:1. Disallowance of Input Service Credit for outward transportation services:The core issue revolves around the disallowance of Input Service Credit amounting to Rs. 2,73,160/- for the period June 2008 to August 2008. The Learned Commissioner (Appeals) upheld this disallowance on the grounds that 'container services used for outward transportation of the final products up to the place of buyer' do not qualify as 'Input Services' under Rule 2(l) of the CENVAT Credit Rules, 2004. The appellant, a manufacturer of Sponge Iron, had availed CENVAT Credit on service tax paid for container services used in the outward transportation of their final product to the buyers' place, claiming it as input service under Rule 2(l). However, the Show Cause Notice issued on 19.03.2009 alleged that these services do not qualify as 'Input Service' as per the CENVAT Credit Rules, 2004.2. Interpretation of Rule 2(l) of the CENVAT Credit Rules, 2004:The appellant argued that Rule 2(l) covers services used in or in relation to the manufacture or clearance of final products and activities relating to business. The expression 'clearance of final product from the place of removal' was specifically substituted by 'clearance of final product up to the place of removal' via Notification No. 10/2008-CE (NT) dated 01.03.2008, effective from 01.04.2008. The appellant contended that the entire amount of Rs. 2,73,160/- had already been reversed/paid along with interest and adjusted in the Order-in-Original dated 30.12.2009.3. Applicability of the Supreme Court judgment in CCE&ST vs. Ultra Tech Cement Ltd.:The Tribunal found that the issue in dispute is squarely covered by the Supreme Court judgment in CCE&ST vs. Ultra Tech Cement Ltd. (2018(9) G.S.T.L. 337 (S.C.)). The Supreme Court clarified that under the amended Rule 2(l), services used for outward transportation of goods from the factory to the customer's premises are not considered 'input services.' The amendment changed the definition from 'from the place of removal' to 'up to the place of removal,' thus limiting the admissibility of CENVAT Credit to services used up to the place of removal. The Tribunal observed that the Adjudicating Authority correctly interpreted Rule 2(l) by restricting the transport service credit up to the place of removal, aligning with the Supreme Court's interpretation.Conclusion:The Tribunal, following the Supreme Court's judgment, upheld the impugned order, sustaining the disallowance of Input Service Credit for outward transportation services. The appeal filed by the appellant was dismissed, and the Tribunal found no reason to interfere with the impugned order.(Dictated and pronounced in the open court.)