The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that outward freight to be eligible input for availing the CENVAT Credit.
The appellant, M/s. Chittor Polyfab is engaged in the manufacture of HDPE/PP Woven fabrics and sacks; the appellant is having service tax registration for payment of service tax on reverse charge basis and was paying it on GTA and other services.
During the course of audit of the appellant, it was noticed that the appellant has wrongly availed the CENVAT Credit on Service Tax on outward freight during the period April, 2015 to June, 2017 in contravention of Rule 2(l) and Rule 3 of CENVAT Credit Rules, 2004. Accordingly, vide Show Cause Notice, CENVAT Credit of the aforesaid amount was proposed to be disallowed and recovered from the appellant along with interest, imposition of penalty was also proposed. The proposal was initially confirmed vide Order-in- Original No. 01/2019 dated January 23, 2019. The appeal thereof has been rejected vide the order being assailed. Being aggrieved, the appellant is before this Tribunal.
The coram of Judicial Member Rachna Gupta observed that under the provisions of Rule 3 of the CENVAT Credit Rules, 2004, CENVAT Credit is admissible to the manufacturer, inter alia, in respect of service tax paid on “input service” received by the manufacturer. The expression “input service” has been defined in Rule 2(l) of the CENVAT Credit Rules, 2004.
The Tribunal held that the outward freight is held to be eligible input for availing the credit in terms of Rule 3 of CENVAT Credit Rules.
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