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

  

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.