2023 (10) TMI 802 - AT - Central Excise

Appeal Allowed: CENVAT Credit on Goods Transport Agency Services for Finished Products Upheld, Pre-April 1, 2008

The Tribunal allowed the appeal, setting aside the impugned order regarding the disallowance of CENVAT credit on 'goods transport agency services' for ... Disallowance of CENVAT Credit - input services - GTA Services - place of removal - HELD THAT:- The issue in dispute is no longer res integra. The final decision on the entitlement of the CENVAT credit for the period prior to the amendment of rule 2(l) of CENVAT Credit Rules, 2004 has been set out by the Hon’ble Supreme Court in re Vasavadatta Cements Ltd, [2018 (3) TMI 993 - SUPREME COURT] though first decided by the Tribunal in ABB Ltd [2009 (5) TMI 48 - CESTAT, BANGALORE] and approved thereafter by the Hon’ble High Court of Karnataka in disposing off appeal of Revenue in [2011 (3) TMI 248 - KARNATAKA HIGH COURT], did not appear to have been followed by the adjudicating authority and probably on the premise that the matter was before the Hon’ble Supreme Court. With the finality accorded by the Hon’ble Supreme Court, the demand for the disputed period does not sustain. Appeal allowed. Issues involved:The appeal against disallowance of credit of tax on 'goods transport agency services' for transportation of finished products, denial of credit based on circular and orders, interpretation of 'input service' in CENVAT Credit Rules, 2004, and the definition of 'place of removal' in relation to CENVAT credit eligibility.Issue 1: Disallowance of credit of tax on 'goods transport agency services'The appellant, engaged in the business of 'iron and steel products', claimed credit of tax discharged on services utilized for transportation of finished products to customers' premises. A Larger Bench decision upheld the eligibility of such credit for outward transportation from the 'place of removal'. Unavailed CENVAT credit was taken by the appellant, leading to objection by central excise authorities and an order for recovery and penalty.Issue 2: Denial of credit based on circular and ordersThe appellant argued that the denial of credit was incorrect, citing decisions by the Larger Bench of the Tribunal, the High Court of Karnataka, and the Supreme Court affirming the eligibility of such credit for the period prior to April 1, 2008. The appellant contended that the change in the definition of 'input service' should be prospectively applicable and challenged the reliance on circulars and previous orders in the impugned decision.Issue 3: Interpretation of 'input service' in CENVAT Credit Rules, 2004The appellant emphasized that the availment of credit was not restricted to any specific time-period, referring to decisions by the Tribunal that reiterated the absence of such limitation in the CENVAT Credit Rules, 2004. The appellant argued against the restrictive interpretation of 'input service' and highlighted the broader scope of services included in the definition.Issue 4: Definition of 'place of removal' in relation to CENVAT credit eligibilityThe Authorized Representative contended that the appellant's stand on allowing credit for services beyond the 'place of removal' conflicted with the Supreme Court's interpretation. The representative relied on a Supreme Court decision rejecting the customers' facility as the 'place of removal'. The Tribunal found that the final decision by the Supreme Court on the entitlement of CENVAT credit for the disputed period rendered the demand unsustainable, setting aside the impugned order and allowing the appeal.This comprehensive summary outlines the key issues, arguments presented, and the Tribunal's decision in the legal judgment regarding the disallowance of credit of tax on 'goods transport agency services' and related matters under the CENVAT Credit Rules, 2004.