Reversal of Input service credit on Supply of Tangible goods service when the Input/Capital Goods removed as such

[vinay wakde]

We are receiving Input through Barges and are availing CENVAT credit as per the duty paying document.  Some times, we are clearing Input as such for which we are proportionately reversed the CENVAT involved therein. During the Audit, we have been also asked to reverse the Input  service  credit proportionately involved  for  transporation of said Input through the Barges under service catagory 'Supply of Tangible Goods'. Kindly clarify whether we also have to reverse the credit on Input service referred above.

With Regards,

VINAY WAKDE

  

[rajkumar shukla]

KINDLY CLARIFY THE ISSUE. HOW THE CLEARANCE OF INPUTS AS SUCH IS CLASSIFIABLE  UNDER SUPPLY OF TANGIBLE GOODS?

[vinay wakde]

We are importing Input Iron Ore Pellets. The Mother Vessel anchorage at High Sea. We are hiring the Barges for transporatation of said imported goods from Mother Vessel to Jetty. The Barge Hire charges are covered under service Tax catagory "Supply of Tangible Goods" since 16.05.2008.  Some times we clear some Input as such 7 reversing proportionate CENVAT involved in the respective duty paying document. However, we are not reversing proportionate Input credit taken by us under catagory "Supply of Tangible Goods". During the Excise Audit, we have been asked to reverse proportionate credit of Input Service taken by us. Kindly clarify.

With Regards,

VINAY WAKDE

 

 

[rajkumar shukla]

CESTAT  in case of A.R.Casting VS CCE (2010) 25 STT 244 (CESTAT SMB) HAS HELD THAT THE RULE USES THE WORDS INPUTS WHICH APLIES TO INPUT GOODS AND NOT INPUT SERVICES. HENCE CENVAT CREDIT OF INPUT SERVICES USED IN  BRINGING THE INPUTS IN THE FACTORY IS NOT REQUIRED TO BE REVERSED..FURTHER CESTAT HAS ALSO HELD THAT CENVAT ON GTA SERVICE IS ALLOWABLE EVEN IF INPUTS/CAPITAL GOODS REMOVED AS SUCH.I GT RATIO OF THESE CASES ALSO APPLY IN PRINCIPLE.TO  YOU. AS GTA CAN BE TREATED AT PAR WITH SERVICES OF BARGE. CCE VS Simplex Castings  2010(25) STT 106, Chtrakoot Steel Vs. CCE

AI Summary

Input service credit reversal not required when transport services for inputs are treated as supply of tangible goods under precedent. Whether proportionate reversal of Input Service Credit is required when inputs transported by barge under 'Supply of Tangible Goods' are removed as such. CESTAT in A.R. Casting v. CCE interpreted 'inputs' as applying to input goods not input services, holding that CENVAT credit on input services used to bring inputs into the factory need not be reversed; analogous treatment of GTA/barge services supports allowing CENVAT on such transport services even where inputs are removed as such.