CESTAT
disallows CENVAT credit of tax paid on outward freight not forming part of
‘assessable value’ of manufactured goods; According to CESTAT, accepting
assessee’s contention that value of service claimed as "input
service" is not includible in assessable value, would result in availment
of undue privilege of credit balance by paying lower tax and retention of tax
recovered from customer, which is clearly not intent of CENVAT Credit Rules
(CCR); CCR do not purport to be an exemption mechanism, but rather govern the
manner in which a fund of ‘non-money’ is acknowledged as means of discharging
tax/duty obligation and regulates its operation: Stating that, “foundation of
Cenvat Credit Rules, 2004 is inherent relationship with tax liability for
without a tax liability on output goods or services, the Rules are merely
academic”, CESTAT holds that quantum of credit is linked to ingredients that
constitute value for tax liability; Rejects assessee’s reliance on various HC
rulings such as ABB Ltd. and Parth Poly Woven Pvt Ltd, stating that they do not
pertain to determination of dispute whether credit availed was in confirmity
with CENVAT Credit scheme, and on other hand, relies on decision of Maharashtra
Scooters Ltd. to conclude that tax paid on outward freight is unavailable to
offset duty liability on output goods : Mumbai CESTAT
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