Can CENVAT Credit on Inward transportation be denied when there is no dispute regarding receipt of material?
Reliance in this connection can be placed on the decision of Hon’ble Mumbai CESTAT in case of M/s Mahanagar Gas Limited vs. CCEx [2014-TIOL-2341-CESTAT-MUM] wherein the appellant procured gas from GAIL through pipelines and the same were supplied to the customers through petrol pumps or pipelines. The plantiff availed CENVAT Credit on the inward transportation of gas and paid duty on the final product. The appellant reported shortage of gas lost during supply of final product in the balance sheet.
In this regard, revenue was of the view that since the shortage has occurred, this the CENVAT Credit availed on inward transportation should be denied. The ld. Counsel for the appellant submits that in this case the CENVAT credit on inputs have not been denied of shortages but input service credit on transportation of these inputs have been denied by the department.
It was also pleaded that shortage has occurred during the receipt of input and supply of final product. Therefore, whatever input is lost during the manufacturing, CENVAT Credit cannot be denied on the same.
The Hon’ble Tribunal noted that when there is no dispute regarding receipt of inputs, then whatever Service Tax has been paid on inward transportation shall be eligible for CENVAT Credit in terms with Rule 2(l) of CCR’04. The appeal was allowed in favour of the assesse.
Author Comments: The department has been raising frivolous appeals against the assesses, which is contra legem.
Author: Deepak Bansal