CESTAT grants aid to Adani Energy Ltd

CESTAT, bench of Ahmedabad, in a relief to Adani Energy Ltd., has ruled that cenvat credit is eligible on the amount of service tax paid for transportation of natural gas by pipeline, as this constitutes services of ‘Entrance.

During the relevant period, the Appellant engaged in three activities: (i) they transported natural gas by pipeline to customers of Gujarat State Petroleum Corporation Ltd.; (GSPCL), namely M/s Arvind Mills, M/s. Arvind Intex etc. and paid service tax in the “transportation of goods by pipeline” category. (ii) They manufactured CNG from natural gas purchased from GSPCL and paid the appropriate central excise duty thereon (iii) Purchased the PNG from GSPCL which was transmitted by pipeline and thus sold to its customers (commercial activity).

The department denied the appellant cenvat credit. The contracting authority confirmed the request and imposed a penalty.

On second appeal, a bench consisting of (Judicial) Member, Mr Ramesh Nair and (Technical) Member, MP Anjani Kumar observed that “with regard to the short term payment of the service charge of Rs. 7, 22,203/ in the month of March 2007 and service tax credit of Rs. 21,99,492/- wrongly used beyond availability during the period of April 2006 to October 2006, the learned lawyer made argue that said liability can only be incurred if it is found that the appellant is not entitled to avail himself of the credit on input services in dispute. Since Cenvat’s claim in the present case is not viable, as noted above, said input service credit was properly used for the payment of service tax during the relevant period and any partial service tax payment will be adjusted against available credit, including credit in this case.”

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