By TIOL News Service

MUMBAI, JUNE 29, 2018: THE appellant is engaged in the manufacture of batteries. They collect old and used batteries at a collection centre. The said batteries are sent to recyclers. The recyclers also belong to the appellant.

After recycling, the lead obtained is returned to the appellant's factory and the same is used in the manufacture of final products i.e. fresh batteries.

The appellant availed CENVAT credit on GTA service used for transporting old and used battery from their stock point to the recycler.

It is the case of the Revenue that the transportation service was not provided to the appellant but to the recycler and, therefore, the appellant is not the recipient of GTA service and hence CENVAT credit is not admissible.

In appeal before the CESTAT, the appellant submitted that the transportation between the stock point to the recycler in respect of old and used batteries was carried out on behalf of the appellant; that they not only paid transportation charges but service tax also; that since, right from collecting old and used batteries from various dealers to the stock point and transportation from stock point to recycler and thereafter the lead generated during recycling is received by the appellant for further manufacture of batteries, the GTA service used is in respect of inputs which ultimately is used in the manufacture of final product. Inasmuch as the same is an input service and credit is admissible.

The AR supported the order of the lower authorities.

The Bench considered the submissions and observed –

"4. …I find that the transportation service for transportation of old and used batteries from the appellant's stock point to recycler is carried out on behalf of the appellant only. The payment of transportation charges as well as service was made by the appellant and the activity of transportation of old and used battery is with an objective to obtain the lead which was used in the manufacture of final product. Therefore, the GTA service is in respect of inward transportation which is clearly covered under the definition of input service…"

Concluding that there is no reason for denial of CENVAT credit on the GTA service, the impugned order was set aside and the appeal was allowed.

(See 2018-TIOL-2008-CESTAT-MUM)