The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the outward transportation of final products up to the place of removal is eligible to avail the CENVAT credit of Excise Duty under rule 3 of the CENVAT Credit Rules (CCR), 2004.
Bunty Foods (India) Pvt Ltd, the appellant assessee availed on tax included in consideration for procurement of ‘outward transportation service’ from their factory to depots of their principals, Parle Products Pvt Ltd and the assessee was a job-worker of Parle Products Pvt Ltd.
The assessee appealed against the order passed by the Commissioner of Central Excise (Appeals) for disallowance of CENVAT credit of Rs. 25,96,230, for the period from January 2005 to April 2007.
Viraj Reshamwala, the counsel for the assessee contended that the goods are returned after processing to the principal and as eligible ‘input service’, procured for transport of goods, before ultimate clearance by manufacturer, the assessee had been availing credit under CENVAT Credit Rules.
Also submitted that the outward transportation of the manufactured product up to the place of removal falls within the definition of input service and is eligible for the availment of CENVAT Credit.
Sunil Kumar Katiyar, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee was not eligible to avail of the CENVAT Credit and the disallowance made by the adjudicating authority was as per the law and liable to be sustained.
The Bench observed that in the case of MP Biscuits Pvt Ltd v. Commissioner of Central Excise, the court held that the assessee had paid Service tax in respect of the input service i.e. the outward transportation of the biscuits to the place of removal and as such, because of Rule 3 of CENVAT Credit Rules the assessee had rightly availed CENVAT credit.
The two-member bench comprising Ajay Sharma (Judicial) and C J Mathew (Technical) quashed the disallowance of CENVAT credit while allowing the appeal filed by the assessee.
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