2012 (6) TMI 771 - AT - Central Excise

Denial of input service credit - outward transportation service - Inclusion of transportation charges into the assessable, value and claimed input service credit of outward transportation service - Held that - Clearances have been made by the appellant from the depot and as per the Section 4A of the Central Excise Act, 1944, the depot is the place of removal as the clearances have been made by the appellant from their depot and the same is place of removal. Therefore, the appellants are entitled for input service credit on GTA service upto the depot. - With regard to the denial of CENVAT credit of ₹ 10,354/-, I find that as per the Board s Circular No. 97/8/2007 dated 23.08.2007 the appellant is satisfied all the conditions as the sales are upto the place of buyer and the transportation charges have formed a part of the assessable value, the transportation risk has been borne by the appellant. Therefore, the appellant is entitled for input service credit on GTA service upto the place of removal i.e. place of buyer s door. The view is supported by the decision in the case of Palco Metals Ltd. vs. CCE - 2011 (8) TMI 88 - CESTAT, AHMEDABAD . Therefore, on the whole, the appellants are entitled for input service credit in the facts of the case. - Decided in favour of assessee.

Summary

Issues:
1. Waiver of pre-deposit of Central Excise demands due to denial of CENVAT credit for outward transportation service.

Analysis:

Issue 1: Waiver of pre-deposit of Central Excise demands

The appellant sought waiver of pre-deposit of Central Excise demands amounting to Rs. 1,17,706 due to the denial of CENVAT credit for outward transportation service from February 2009 to October 2009. The appellant, a manufacturer of I.C. Engine Parts and Aluminium Ingots, included transportation charges in the assessable value of goods cleared directly to customers from the factory. The appellant also cleared goods from their depot, claiming input service credit on transportation up to the depot under Section 4A of the Central Excise Act, 1944. The Revenue contended that post-amendment in 2008, the appellant was not entitled to input service credit beyond the factory as it became the place of removal.

After hearing both sides, the judge decided to dispose of the appeal after granting the waiver of pre-deposit. The appellant argued that clearance from the depot constituted the place of removal, entitling them to input service credit on Goods Transport Agency (GTA) service. They cited compliance with Circular No. 97/8/2007, asserting entitlement to credit on clearances made from the factory to the buyer on a FOR basis.

The judge found in favor of the appellant, granting input service credit of Rs. 1,07,352 for clearances made from the depot. Additionally, the appellant was entitled to Rs. 10,354 credit as per Circular No. 97/8/2007, covering transportation charges forming part of the assessable value up to the buyer's place. The decision was supported by the precedent set in Palco Metals Ltd. vs. CCE - 2012 (280) ELT 299 (Tri-Ahm.). Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment highlights the importance of understanding the place of removal in claiming input service credit under the Central Excise Act, 1944, and the relevance of complying with relevant circulars to support credit claims for transportation services.