2010 (8) TMI 845 - AT - Service Tax

Summary

Issues involved:
Denial of input-service tax credit on "goods transport agency (GTA) service" due to availing Cenvat credit of service tax on outward freight beyond the place of removal of the factory.

Analysis:
The appeal was filed against the denial of input-service tax credit on outward freight charges by the appellants. The investigation revealed that the appellants availed Cenvat credit of service tax on outward freight beyond the place of removal of the factory, leading to a show-cause notice for denial of credit, interest, and penalty. The appellants argued that the transportation cost was included in the price of goods and formed part of the assessable value, making them eligible for input-service tax credit as per Circular No. 97/8/2007-ST. They cited the Punjab and Haryana High Court's judgment to support their claim of retrospective effect of the circular. The ownership of goods remained with the appellants until delivery at the buyer's end, and the freight charges were integral to the finished goods, meeting the conditions of the circular.

The Departmental Representative contended that the appellants failed to provide documents proving ownership of goods during transit and lacked evidence such as insurance bills or chartered accountant certificates. The absence of such documentation raised doubts about the ownership status of the goods during transportation. After hearing both sides, the Tribunal noted the relevance of the circular and the necessity to verify ownership during transportation. While the appellants did not present a chartered accountant's certificate, they did provide purchase orders indicating delivery at the buyers' end, with transportation costs included in the assessable value. The Tribunal decided to remand the matter to the adjudicating authority for verification of ownership details during transportation. The authority was directed to allow credit if the facts were confirmed, providing the appellants with a fair opportunity to present their case.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal by remanding the case for verification of ownership details during transportation. The decision emphasized the importance of fulfilling the conditions outlined in the circular to claim input-service tax credit on outward freight charges.