2016 (8) TMI 1261 - AT - Service Tax

CENVAT credit - input service - outward freight for delivery of goods at the buyers premises - Held that - evidently the freight component has been incurred by the appellant and the same has formed the part of transaction value, on which duty liability has been discharged - the price at which the goods were sold to the buyers should be considered as the price for the purpose of determination of the place of removal . Since, freight is forming a part of the transaction value, the same should be considered as input service for the purpose of taking Cenvat credit - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit on service tax paid on outward freight for delivery of goods at buyers' premises.

Analysis:
1. Ownership and Title of Goods: The appellant argued that as per purchase orders, ownership and title of goods remained with them until delivery at buyers' premises. They contended that Cenvat credit on outward freight should be available since they bore the freight cost and discharged Central Excise duty based on this. The Ld. Advocate cited judgments of the Supreme Court in support of this argument.

2. Contentions of the Respondent: The Ld. AR reiterated the findings of the impugned order and relied on judgments of the Hon'ble Supreme Court and Calcutta High Court to support the denial of Cenvat credit on outward freight for delivery of goods at buyers' premises.

3. Evaluation of Facts: The Tribunal examined the terms of the purchase orders, which specified that the FOR destination was the buyer's site. It was noted that the appellant had supplied goods with freight billed to the seller and bore the cost of transit insurance until delivery at the buyer's premises. The Tribunal found that the service tax paid on outward transportation of goods fell within the definition of input service for Cenvat credit as per Rule 2(l) of the Cenvat Credit Rules, 2004.

4. Judicial Precedents: The Tribunal referred to judgments of the Hon'ble Supreme Court in cases where it was held that when freight and transit insurance are borne by the seller for delivery at the buyer's premises, that place should be considered the 'place of removal'. The Tribunal distinguished other judgments cited by the parties based on the specific facts and circumstances of those cases.

5. Decision: After considering the arguments and evidence, the Tribunal concluded that the impugned orders lacked merit. It set aside the orders and allowed the appeals in favor of the appellant, emphasizing that the price at which goods were sold to buyers should be considered for determining the 'place of removal', and since freight formed part of the transaction value, it should be considered an input service for Cenvat credit.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and conclusions reached by the Appellate Tribunal CESTAT NEW DELHI regarding the denial of Cenvat credit on service tax paid on outward freight for the delivery of goods at the buyers' premises.