The CESTAT, Ahmedabad bench, in a relief to Adani Energy Ltd., has held that cenvat credit is allowable on the amount of service tax paid for transportation of natural gas through pipeline as the same constitutes input services.
The appellant during the relevant period engaged in three activities: (i) they transported the natural gas through pipeline to Customers of Gujarat State Petroleum Corporation Ltd. (GSPCL) viz, M/s Arvind Mills, M/s. Arvind Intex etc. and paid service tax on the same under the category of “transportation of goods through pipeline”. (ii) They Manufactured CNG from Natural Gas procured from GSPCL and paid appropriate Central Excise duty of the same (iii) Purchased the PNG from GSPCL which was transmitted through pipeline and thereby sold it to its customers(Trading Activity).
The department denied cenvat credit to the appellant. The adjudicating authority confirmed the demand and imposed penalty.
On second appeal, a bench comprising Member (Judicial), Mr. Ramesh Nair and Member (Technical), Mr. P. Anjani Kumar observed that “as far as short payment of service tax of Rs. 7,22,203/ in the month of March 2007 and Service tax Credit of Rs. 21,99,492/- wrongly utilized in excess of availability during the period April 2006 to October 2006 is concerned, the Learned Counsel has submitted that the said liability can only be sustained if it is held that the Appellant are not entitled to avail the credit on inputs services in dispute. Since the Cenvat demand in the present case is not sustainable as discussed above, the said input service credit was correctly utilized for payment of service tax during the impugned period and any short payment of service tax shall stand adjusted against the available credit including the credit in this case.”
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