2013 (8) TMI 59 - AT - Central Excise

Cenvat Credit on GTA services for outward transportation charges - Purchase orders categorically indicate that the goods are to be supplied by the appellant at the purchasers doorstep on FOR terms. LRs which were also produced along with the specimen sample also indicate of door delivery to the purchasers of the goods. The invoice which has been raised by the appellant indicate specifically the purchase orders and the terms therein mentioned. In light of such a factual matrix, the appellant had contracted for delivery of the goods manufactured by him to the purchasers doorstep Held that -Relying upon the judgment of Hon ble High Court of Punjab & Haryana in the case of Ambuja Cements Ltd. 2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT and also in the case of Palco Metals Ltd. 2011 (8) TMI 88 - CESTAT, AHMEDABAD , cenvat credit of the service tax paid on the outward transportation is eligible and allowed Decided in favor of Assessee.

Summary

Issues:
1. Central Excise duty short paid due to additional consideration.
2. Availment of service tax credit on outward transportation charges.

Central Excise Duty Short Paid:
The appeal was filed against an order requiring recovery of Central Excise duty due to an amount received by the appellant from a company for goods manufactured as per specific directions but later declined by the company. The appellant sold the goods as scrap due to the change in design, incurring a loss compensated by the company through a debit note. The department considered the amount as additional consideration under Rule 6 of the Central Excise Valuation Rules. The appellant argued against the recovery, stating the goods were not fit for consumption by other manufacturers. The Tribunal analyzed the facts and held that the amount was not liable for Central Excise duty, setting aside the demand.

Availment of Service Tax Credit:
The appellant availed credit of service tax paid on outward freight transportation charges for finished goods clearance, which was considered ineligible as per Cenvat Credit Rules. The department issued a show cause notice for denying the credit, leading to confirmation of the demand with interest and penalty by the adjudicating authority. The appellant appealed, citing contractual terms for doorstep delivery to argue for credit eligibility. The Tribunal examined the purchase orders, LR copies, and invoices indicating doorstep delivery terms. Relying on judicial precedents, including a High Court judgment and a Tribunal order, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the denial of service tax credit on outward transportation.

In conclusion, the Tribunal allowed the appeal challenging the denial of cenvat credit for service tax paid on outward transportation, based on contractual terms for doorstep delivery as evidenced by purchase orders and supporting documents. The judgment emphasized the importance of factual evidence and judicial precedents in determining credit eligibility, ultimately ruling in favor of the appellant on both issues presented in the case.