2011 (8) TMI 88 - AT - Service Tax

Cenvat credit - service tax paid on GTA services for outward transportation of goods manufactured - On going through one of the purchase orders placed by Mid India Power & Steel Limited dated 10.05.2008, it is noticed that the purchase order clearly shows that the price is on FOR Pithampur basis and material has to be delivered at their work site at Pithampur and it is inclusive of freight - Board s Circular No. 97/8/2007-ST dated 23.08.2007 - The appellants have submitted that the insurance cost and freight is included in the assessable value and therefore, they are fulfilling the conditions as per the Board s Circular - Appeals are allowed

Summary

Issues:
1. Availing cenvat credit of service tax paid on GTA services for outward transportation of goods.
2. Determining the place of removal for availing cenvat credit.
3. Interpretation of relevant Circular issued by the Board regarding the place of removal.

Analysis:
1. The appeals involved the issue of availing cenvat credit of service tax paid on GTA services for outward transportation of goods. The appellants initially did not take credit until a Tribunal decision prompted them to do so, leading to the issuance of show cause notices for different periods from 2007 to 2009.

2. The Tribunal analyzed the issue of availing cenvat credit for the period prior to April 1, 2008, and subsequent periods. For the period before April 1, 2008, the Tribunal referred to a High Court decision stating that credit of service tax would be admissible up to the place of removal. The question for subsequent periods was whether the appellants utilized inputs for transportation up to the place of removal.

3. The Tribunal considered the place of removal crucial for determining credit availability. Lower authorities had denied credit based on the belief that sales were made at the factory gate. However, the appellants argued that sales were on a "FOR" basis, with freight and insurance included in the price. The Tribunal agreed with the appellants, citing a Circular stating that if the sale occurred at the destination point, credit of service tax paid on transportation would be admissible.

4. After reviewing the submissions and documents, including purchase orders and the Circular, the Tribunal concluded that the sale was on a "FOR" basis, with insurance and freight costs included in the assessable value. Consequently, the Tribunal allowed all three appeals, providing consequential relief to the appellants based on the interpretation of the Circular and the facts presented.

This detailed analysis of the judgment highlights the issues involved, the legal interpretations made by the Tribunal, and the ultimate decision rendered in favor of the appellants based on the evidence and relevant legal provisions.