Reversal of cenvat credit already taken

[Ajay Kedia]

We have transported our finished product to our customers godown located outside and paid transportation on behalf of our customers as mentioned in their order.We have paid service tax on the transportation value and have taken CENVAT on the output serice provided by us in light of the tribunal judgement in the case of ABB Ltd.We have shown the judgement copy also eventhough AC office is asking us to reverse the credit taken by us against above transaction. Pls. clarify current status and present rules/decission on the issue whether we are eligible to take CENVAT or we have to reverse the entry as directed by AC Office. Ajay Kedia

[Surender Gupta]

The decision of CESTAT in the case of ABB Ltd. is valid only for the relevant period i.e prior to the period 1.4.2008. You may refer to amended provision of rule 2(l) of the Cenvat Credit Rules, 2004. Outward transportation beyond the place of removal is not eligible for cenvat credit on or after 1.4.2008. But, for the period prior to 1.4.2008, you are eligible for credit.

AI Summary

Cenvat credit eligibility: outward transportation beyond place of removal disallowed after amendment; prior-period credits remain permissible. Outward transportation beyond the place of removal does not qualify for Cenvat credit under amended rule 2(l) of the Cenvat Credit Rules, 2004, with that disallowance applying on or after 1.4.2008; credits for such transportation remain allowable for periods prior to that amendment where tribunal precedent (ABB Ltd.) governed.