HIGH COURT OF KARNATAKA
Commissioner of Central Excise
Triveni Engineering & Industries Ltd.
CE NO. 42 OF 2010
APRIL 20, 2011
Ravi Malimath, J.
This appeal is by the revenue being aggrieved by the order passed by the Tribunal holding that the assessee is entitled to avail Cenvat credit on service tax paid on ‘Goods Transportation Agencies’ beyond the place of removal.
2. The assessee is engaged in the manufacture of goods and availed Cenvat credit on Inputs/Capital goods/Input services under the provisions of Cenvat Credit Rules. During the course of audit it was found that the assessee had availed Cenvat credit of Rs. 5,45,460/- for the service tax paid by the assessee on the transportation charges incurred by them towards the outward transportation of goods cleared by them at their factory gate. Accordingly a show-cause notice was issued to the assessee stating that the Cenvat credit has been wrongly availed of on service tax paid by them. Hence, a demand was made to an amount of Rs. 5,45,460/- along with interest and penalty. The assessing authority confirmed the demand, interest and penalty. Aggrieved by the same, an appeal was filed before the Commissioner who allowed the appeal and set aside the order passed by the assessing authority and remanded the case for examination and a fresh decision. Aggrieved by the same, the appellant approached the Tribunal. The Tribunal by placing reliance on the Larger Bench decision in the case of ABB Ltd. v. CCE&ST  21 STT 77 (Bang. – Cestat) and allowed the appeal and held that the assessee is eligible to avail Cenvat credit on service tax paid on goods transportation agencies beyond the place of removal. Aggrieved by the same, the revenue has preferred the present appeal.
3. This appeal was admitted to consider the following questions of law:-
“(a) Whether the Hon’ble Customs Excise and Service Tax Appellate Tribunal (CESTAT), Larger Bench, Bangalore in the Final Order No. 1122/2009 dated 13.08.2009 was right in holding that the issue is squarely covered by the decision of the Larger Bench in the case of ABB Ltd v. CCE & ST, Bangalore (2009-TIGL-830-Cestat-BANG-LB) ?
(b) Whether in view of the varying interpretation of the term ‘input service’ in various decisions, the Hon’ble Cestat, Larger Bench, Bangalore was right in interpreting the term in the manner as in the order ?”
An identical issue came up for consideration before the Division Bench of this Court in CCE&ST v. ABB Ltd.  32 STT 141/12 taxmann.com 57 (Kar.). This court by the order dated 23-3-2011 came to the conclusion that if service tax is paid on transportation charges, it fell within the phrase “clearance of final products from the place of removal” and therefore, the assessee was entitled to CENVAT credit.”
4. The question of law that arises for consideration in this appeal having since been answered by the Division Bench in the above referred appeal, the substantial question of law are answered in favour of the assessee and against the revenue.