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2015 (5) TMI 1001 - AT - Central ExciseCenvat Credit of service tax paid on the freight amount - Held that - In the present case, the available records/documents clearly depict that the ownership of goods have been transferred from the respondent to the buyers at their site; the respondent bore risk of damage to the goods during transit; and that the freight charges were an integral part of the price of goods sold by the respondent to its buyers. Therefore, in this situation, the buyer s premises will qualify as place of removal for the purpose of taking Cenvat Credit of service tax paid on transportation of goods. As upon proper analysis of the Cenvat provisions, Central Excise statute and the interpretation placed by various judicial forums on such statutory provisions, the CBEC vide Circular dated 23.8.2007 has clarified that customers site where the ownership of the goods have been transferred, should be considered as place of removal for the purpose of taking cenvat credit. Thus eligibility of Cenvat Credit on the transportation charges paid on the goods, where the ownership transferred at the buyer s end confirmed - Decided in favour of assessee.
Issues:
- Eligibility of Cenvat Credit on service tax paid on freight charges for transportation of goods to buyer's premises. - Interpretation of 'place of removal' under Section 4(3)(c) of Central Excise Act, 1944. - Integration of transportation charges in assessable value for central excise duty liability. - Applicability of Rule 3 of the Cenvat Credit Rules, 2004. - Consideration of buyer's premises as 'place of removal' for Cenvat Credit. Issue 1: Eligibility of Cenvat Credit on service tax paid on freight charges for transportation of goods to buyer's premises The Revenue appealed against the Commissioner (Appeals) Indore's order allowing Cenvat Credit of service tax on freight charges paid by the respondent for transporting goods to the buyer's premises. The Revenue contended that under Section 4(3)(c) of the Central Excise Act, the 'place of removal' is either the factory gate or the depot, not the buyer's premises where ownership of goods is transferred. Issue 2: Interpretation of 'place of removal' under Section 4(3)(c) of Central Excise Act, 1944 The definition of 'place of removal' in Section 4(3)(c) of the Act is crucial for determining Cenvat Credit eligibility. The Tribunal analyzed the term and concluded that apart from locations specified in the Act, the buyer's premises, where ownership transfers, should also be considered as the 'place of removal.' Issue 3: Integration of transportation charges in assessable value for central excise duty liability The respondent argued that as per the agreement with the buyer, goods were delivered on FOR basis at the buyer's site, and all charges, including transportation and excise duty, were integrated into the assessable value. This integration led to the discharge of central excise duty liability by the respondent. Issue 4: Applicability of Rule 3 of the Cenvat Credit Rules, 2004 Rule 3 of the Cenvat Credit Rules, 2004 allows manufacturers to claim Cenvat Credit on service tax paid for input services. The Tribunal examined this rule in the context of the case to determine the eligibility of the respondent for Cenvat Credit on transportation charges. Issue 5: Consideration of buyer's premises as 'place of removal' for Cenvat Credit The Tribunal referred to a CBEC Circular clarifying that the customer's site, where goods' ownership transfers, should be considered as the 'place of removal' for Cenvat Credit. It cited previous judgments supporting this interpretation and distinguished a judgment cited by the Revenue, emphasizing the relevance of ownership transfer in determining the 'place of removal.' In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the eligibility of the respondent for Cenvat Credit on service tax paid for transportation to the buyer's premises. The judgment clarified the interpretation of 'place of removal' under the Central Excise Act and highlighted the significance of ownership transfer in determining Cenvat Credit eligibility.
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