25 November 2011
CBEC Master Circular No. 971812007-ST, dated 23-08-2007
Comments : As per Rule 3 of the Cenvat Rules, 2004, Cenvat credit of, inter alia, service tax leviable and paid on any ‘input services’ can be taken. The rule does not distinguish as to who (i.e. the GTA, the consignor or the consignee himself) has paid the aforesaid tax. The only condition required to be satisfied is that the consignee must be a manufacturer of excisable goods or a provider of taxable service and the service must be in the nature of ‘input service’ for such activity. In case of inward transportation of inputs or capital goods, such service (being specifically mentioned under the definition of ‘input service’) would qualify to be called as ‘input service’ and, thus, the service tax paid (by any of the persons mentioned above) on it would be eligible as credit to the receiver if he is either a manufacturer of excisable goods or a provider of taxable service.
25 November 2011
To add, Practically speaking, taking into account recent case laws, Cenvat credit of service tax paid can be taken on inward transportation only and not on outward transportation. As per definition of 'input service' under CCR, 2004, credit can be taken on services used 'upto the place of removal'
Exception is FOR (Free on road) destination sales in respect of outward transportation. In case of Ambuja Cements Ltd. - P & H - High Court held in favour of assessee (Mere exception).
But in recent case of Lafarge India Ltd., Delhi tribunal has rejected the claim of credit on outward transportation even for FOR sales.
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