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

Business Denied CENVAT Credit for Post-April 2008 Transport Costs; ABB Ltd. Ruling Not Applicable After Rule Change A business transported finished products to a customer's location, paid transportation costs, and claimed CENVAT credit based on a tribunal judgment in the ABB Ltd. case. Despite providing the judgment, the Assistant Commissioner (AC) office requested a reversal of the credit. A respondent clarified that the ABB Ltd. decision is applicable only for periods before April 1, 2008. According to amended Cenvat Credit Rules, 2004, outward transportation beyond the place of removal is ineligible for CENVAT credit after that date. Therefore, the credit is valid only for transactions before April 1, 2008.