Cenvat Credit allowed for tax paid under reverse charge even if same was not payable

Petro Carbon & Chemicals Private Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)

The short issue that arises for consideration in the instant appeal is whether the Appellant is entitled to Cenvat credit of Service Tax paid by it on the freight component in relation to transport of goods from non-taxable territory to India when as per the lower authorities the said service was exempted from levy of Service Tax during the period when such import of goods took place. In this regard observation of the Adjudicating authority in para 5.1 to 5.4 is important, whereby the learned Adjudicating authority has dealt with the history of taxation of services of transport of goods by vessel from non-taxable territory to India and has concluded that during the said period in which the Appellant had availed the services of shipping lines, the said services were exempt from Service Tax. Thus, it is an admitted fact that the first Appellant was not liable to pay Service Tax on the transportation of goods by vessel services. However, the tax was paid and accordingly the Appellant had availed Cenvat credit of the same.

By respectfully following the judgement of the Hon’ble High Court in the case of in the case of COMMR. OF C.EX. & S.T., LTU, CHENNAI Versus TAMILNADU PETROPRODUCTS LTD. [2015 (40) S.T.R. 878 (Mad.)], CESTAT hold that the Appellant assessee cannot be asked to reverse the Cenvat credit availed on tax paid under Reverse Charge basis when the payment is not disputed. Thus, I set aside the demand on the above ground.

FULL TEXT OF THE CESTAT JUDGEMENT

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