CENVAT - Payment of ST on GTA service by utilizing CENVAT credit cannot be denied on ground that rule 3(4)(e) of CCR, 2004 allows such utilization only in respect of Output service and not for Input service - appeal allowed: CESTAT
By TIOL News Service
AHMEDABAD, JUNE 16, 2014: THE The appellant is manufacturer of excisable goods paying service tax on the services received by them under the category of Transportation of Goods by Road (GTA Service) in respect inward transportation of inputs as well as outward transportation of finished goods. During the period from October 2005 to September 2006, appellant discharged its service tax liability of Rs.6,01,055/- by utilizing CENVAT Credit.
The department objected to this mode of payment of ST on the ground that as per Rule 3(4)(e) of CCR, 2004, CENVAT Credit could not be utilized for payment of service tax on GTA service, which was the appellant's input service and not its output service. Objection is also raised on the appellant taking CENVAT Credit of service tax of Rs.5,02,949/- paid on outward transportation of finished goods beyond the place of removal.
Both the demands were confirmed along with interest and penalties.
As the Commissioner(A) upheld this order, the appellant is before the CESTAT.
The appellant filed written submissions and mentioned therein that the issue involved for the period prior to 01.03.2008 has been settled in favourin their own case for the period from October2006 to February 2008 vide Order No. M/10524/WZB/AHD/2013 dated 12.02.2013 and by the Tribunal decisions in Nova Petrochemicals Ltd. 2012-TIOL-116-CESTAT-AHM ; Cheran Spinners Ltd. 2013-TIOL-665-HC-MAD-ST ; and Panchamahal Steel Limited 2014-TIOL-510-CESTAT-AHM-LB.
The Revenue representative supported the order of the lower authorities and cited the following case laws - ITC Ltd. 2011-TIOL-568-CESTAT-BANG and Vesuvious India Limited 2013-TIOL-1038-HC-KOL-ST .
The Bench observed that the first issue viz. whether the appellant could utilize CENVAT Credit for discharging its service tax liability on GTA service received in respect of inward transportation of inputs for the period from October 2005 to September 2006has been decided in favour of the appellant by the bench vide the referred order and, therefore, the demand of Rs.6,01,055/- was set aside as not sustainable.
In the matter of the second component of demand of Rs.5,02,949/- being the CENVAT credit taken of the ST paid on outward transportation of finished goods beyond the place of removal, the Bench observed that the appellant had not placed any evidence on record to show that -
(i) sale of goods had taken place at the destination point;
(ii) the ownership of goods and the property in the goods remained with the appellant till the delivery of the goods in acceptable condition to the purchaser at his door step;
(iii) the appellant bore the risk of loss of or damage to the goods during transit to the destination;
(iv) the freight charges were an integral part of the price of goods; and
(v) the sale and the transfer of property in goods occurred at the destination place to prove that the place of removal was the destination point.
The CESTAT noted that the issue involved has been decided by the High Court of Calcutta in the case of Vesuvious India Limited 2013-TIOL-1038-HC-KOL-ST in the following words -
"13. By the amendment made with effect from 1st April, 2008 substituting the word from by the word uptoall that has been done is to clarify the issue. Neither the services rendered to the customer for the purpose of delivering the goods at the destination was covered by the definition of input service prior to 1st April, 2008, nor is the same covered after 1st April, 2008. If the definition provided in Section 2(l)(ii) is read a whole, if would appear that outward transportation charges or taxes paid in regard thereto is claimable only with regard to those transports which were made from one place of removal to another place of removal."
Relying upon the aforesaid decision of the High Court the CESTAT held that the CENVAT Credit of service tax paid by the appellant on GTA service received in respect outward transportation of finished goods beyond the place of removal is not admissible to them and the lower authorities had correctly disallowed the credit of Rs.5,02,949/- along with appropriate interest.
The penalty imposed of Rs.1 lakhs u/r 15(1) of CCR, 2004 was set aside on the ground that the issue involved was one of interpretation of definition of input service under Rule 2(l) of the CCR, 2004 and was under litigation.
In fine, the appeal was partially allowed.
(See 2014-TIOL-1036-CESTAT-AHM )
