2009 (12) TMI 638 - AT - Central Excise

Cenvat credit on GTA service - freight charges incurred in the transportation of the excisable goods ex-factory formed an integral part of the price of the goods and were borne by the assessee - Held that - if three conditions were fulfilled Cenvat credit of service tax paid on GTA service availed for transportation of excisable goods from the factory to the customer s premises could be taken by the manufacturer of the goods. The first condition is that the ownership of the goods and the property in the goods should not have been transferred to the buyer till the delivery of the goods in acceptable condition at his door step; secondly the seller has to bear the risk of loss of or damage to the goods during the transit to the destination; thirdly the freight charges should be an integral part of the value of the excisable goods sales of the goods were on FOR Destination basis only. It was also found that the freight charges were an integral part of the price of the goods appellant has not contended that any of the above conditions was not satisfied by the assessee in terms of Hon ble High Court s judgment in Ambuja Cements Ltd. the benefit of Cenvat credit on GTA service availed by the respondent during the period of dispute is prima facie liable to be allowed to them On this ground the stay applications are dismissed

Summary

Issues:
1. Delay in filing appeals by the department.
2. Allowance of Cenvat credit on GTA service to the assessee.
3. Conditions for availing Cenvat credit on service tax paid on GTA service.
4. Assessment of whether the conditions for Cenvat credit were met by the assessee.
5. Decision on the department's stay applications.

Analysis:
1. The judgment addresses the delay in filing appeals by the department against a common order of the Commissioner (Appeals). The Tribunal notes the delay but condones it due to the absence of opposition. The first appeal was filed within time, while supplementary appeals were filed with delay, which was condoned.

2. The Commissioner (Appeals) allowed Cenvat credit on GTA service to the assessee, considering freight charges as an integral part of the goods' price borne by the assessee. The department referred to a Board's Circular and a High Court judgment setting conditions for availing Cenvat credit on service tax paid on GTA service.

3. The High Court's judgment established three conditions for claiming Cenvat credit on GTA service: non-transfer of goods ownership, seller bearing risk during transit, and freight charges being integral to goods value. The judgment cited 'FOR Destination' price delivery fulfilling these conditions.

4. The Tribunal found that the sales were on 'FOR Destination' basis, and freight charges were integral to the goods' price. The department did not challenge these findings, and the appellant did not contest the satisfaction of the prescribed conditions. Therefore, the Tribunal concluded that the Cenvat credit on GTA service should be allowed to the respondent.

5. Based on the above analysis and the satisfaction of conditions, the Tribunal dismissed the department's stay applications regarding the appellate Commissioner's order. The decision was made in line with the High Court's judgment and the findings of the Commissioner (Appeals) regarding the Cenvat credit eligibility for the respondent.