2014 (12) TMI 832 - AT - Service Tax

Disallowance of Cenvat Credit - availment of goods transport service - Held that - Perusal of the tender document dated 16.07.2009 shows that the property over the goods passes at the point of delivery, since the assessee supplier was liable to replace any broken or damaged goods that occurred in the course of transit or during the testing and trial at site. This indicates that the buyer of the goods i.e. Madhya Gujarat Vij Company Ltd. did not own the goods at the factory gate. This leads to a conclusion that when the appellant assessee was obliged under the contractual obligation to deliver the goods at its own risk and cost at the buyer s point incurring separate cost of transport charge for which service tax was paid, there is no scope to hold that the contract value was inclusive of delivery cost. Further, Revenue has also not made any effort to include the cost of transport in assessable value. This further establishes that to discharge contractual obligation in respect of delivery of the goods at buyers point, it was liability of the assessee to make delivery FOR. Therefore, appeal of the assessee is allowed and there shall be no disallowance of Cenvat Credit. - Decided against Revenue.

Summary

Issues: Disallowance of Cenvat Credit of Service Tax, Levy of Penalty by the Authority Below

In the judgment delivered by Mr. D.N. Panda at the Appellate Tribunal CESTAT NEW DELHI, the appellant challenged the disallowance of Cenvat Credit of Service Tax amounting to &8377; 1,68,687 plus Education cess and higher education cess related to the availment of goods transport service. On the other hand, the revenue appealed against the authority's decision of not imposing a penalty. Both appeals, sharing a common cause, were consolidated for a joint resolution.

The analysis of the tender document dated 16.07.2009 revealed that the property over the goods transferred at the point of delivery, indicating that the buyer did not own the goods at the factory gate. The contractual obligation required the appellant to deliver the goods at the buyer's point at their own risk and cost, incurring a separate transport charge with paid service tax. It was established that the contract value did not include the delivery cost, and the revenue did not attempt to include the transport cost in the assessable value. Consequently, the appellant was obligated to make delivery FOR to fulfill the contractual obligation. As a result, the appeal of the assessee was allowed, and there was no disallowance of Cenvat Credit. Conversely, the revenue's appeals were dismissed due to the lack of substantial grounds for appeal.

The judgment was dictated and pronounced in the open court, providing a clear resolution to the issues raised by both parties.