Availability of Cenvat Credit of Service Tax paid on Outward Transportation- Matter remanded to Larger Bench "

Whether Service Tax paid on outward transportation beyond the place of removal is eligible as Cenvat Credit?

Honorable Tribunal has disallowed the credit citing that service tax on outward transportation is not an input service in 2007 -TMI - 1134 - CESTAT- Ahbad and  2007 -TMI - 1165 - CESTAT NEW DELHI

But, now Bangalore Bench of CESTAT in 2007 -TMI - 1780 - CESTAT, BANGALORE has recognized that the matter needs to be analyzed in details and referred the same to the larger bench by stating: -

Hence, we do not agree with the interpretation of the Tribunal in the Gujarat Ambuja Cements Ltd's case (supra). Since there is a difference in opinion between the two co-ordinate Benches, the issue has to be resolved by referring the matter to a Larger Bench. 

Meaning of ""Input Service"" under Rule 2(l) of the Cenvat Credit Rules, 2004 is as follows:

(l) ""input service"" means any service,-

(i) used by a provider of taxable service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal,

and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

Cenvat credit for outward transportation disputed; matter referred to larger bench after conflicting tribunal interpretations. Whether service tax on outward transportation beyond the place of removal qualifies as Cenvat credit has produced divergent tribunal views and was referred to a Larger Bench. Central to the reference is Rule 2(l) of the Cenvat Credit Rules, 2004, which defines input service and expressly includes outward transportation up to the place of removal, making the scope of transportation beyond that point decisive for credit eligibility.