2015 (10) TMI 231 - AT - Service Tax

Denial of CENVAT Credit - Denial on outward transportation of goods - Held that - With regard to the goods sold on FOR basis as transportation charges have been included in the assessable value of the goods and goods are delivered on the door of the buyer. Therefore,the ownership of the goods remains with the appellant. In these circumstances appellant has complied with the condition of the CBEC circular no. 97/8/2007 dated 23/8/2007. Therefore, I hold that on transportation charges where the goods are sold on FOR basis appellant is entitled to claim Cenvat Credit on outward transportation. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
- Denial of input services credit on outward transportation of goods

Analysis:
The appellant, a manufacturer of various goods, appealed against the denial of Cenvat Credit on transportation charges from factory to depot and from factory to customers' places. The dispute arose from the revenue's stance that duty on transportation charges from factory to depot should be paid as it was not included in the assessable value. Similarly, for goods sold on FOR basis, the revenue argued that since the place of removal was the factory gate, transportation charges beyond that point were not eligible for Cenvat Credit. The appellant contended that in cases where goods were sold from the depot, the place of removal remained the factory gate, entitling them to claim Cenvat Credit on transportation charges. They also argued that for goods sold on FOR basis, they complied with CBEC circular conditions, making them eligible for Cenvat Credit on outward transportation services.

The appellant's counsel emphasized that they did not charge customers for transportation from the depot, and if the selling prices from the factory and depot were the same, they should be allowed Cenvat Credit on outward transportation charges. Regarding goods sold on FOR basis, it was argued that since transportation charges were included in the assessable value and the ownership of goods remained with the appellant until delivery to the buyer's door, they met the CBEC circular requirements for claiming Cenvat Credit on outward transportation.

The revenue, however, contended that transportation charges to the depot should be part of the assessable value, and since the appellant failed to add these charges, they were not entitled to Cenvat Credit. Additionally, for goods sold on FOR basis, the revenue argued that the appellant retained ownership and risk until delivery, thus disqualifying them from claiming Cenvat Credit on outward transportation charges.

After hearing both parties, the tribunal remanded the matter to the Adjudicating Authority for verification. The Authority was tasked with examining whether the prices from the factory to depot were the same and whether the appellant charged customers for transportation from the factory to depot. It was held that for goods sold on FOR basis, where transportation charges were included in the assessable value and ownership remained with the appellant until delivery, Cenvat Credit on outward transportation was permissible.