2015 (11) TMI 506 - AT - Central Excise

Denial of CENVAT Credit - GTA Service - clearances to the job worker and their own unit made on payment of duty - Credit beyond place of removal - Held that - Goods were cleared on payment of duty but it is admittedly not clearance for sale of the goods - where the goods is cleared from factory, but place of removal is determined only a place, where the goods is sold. In case goods is sold from factory, the factory gate is considered as place of removal but though the clearances is made from the factory but goods is not sold from factory, but sold at any other place after removal of goods from the factory, the said place from where the goods is sold shall be the place of removal . In the instant case though the goods were cleared on payment of duty from the factory of the appellant but not sold from the factory. In case of job work goods the sale of the finished goods took place from the appellant factory and in case of removal of goods to their own other unit the sale took place from that other unit. Therefore in the present case transportation (GTA) service is used up to the place of removal and hence qualified as input service. - GTA in the present case being used up to the place of removal covered under the definition of input service and hence admissible for Cenvat Credit. I therefore set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
- Denial of Cenvat credit for outward GTA used for removal of intermediate goods.
- Interpretation of the term "place of removal" under Section 4(3)(c) of Central Excise Act, 1944.

Analysis:

Issue 1: Denial of Cenvat credit for outward GTA used for removal of intermediate goods:
The appellant availed Cenvat Credit for outward GTA used for the transportation of intermediate goods either to a job worker or to their own other units. The adjudicating authority confirmed the demand for denial of credit amount and imposed interest and penalty. The Commissioner (Appeals) upheld the order-in-original. The appellant contended that the transportation services were used before the stage of sale of goods, as the goods were cleared for further processing or manufacturing before being sold. The appellant argued that the denial of credit was based on misinterpretation of the term "place of removal." The Revenue, on the other hand, argued that once goods are cleared on payment of duty, it constitutes a sale from the place of removal, which, in this case, was the appellant's factory gate.

Issue 2: Interpretation of the term "place of removal" under Section 4(3)(c) of Central Excise Act, 1944:
The Tribunal analyzed the definition of "place of removal" under Section 4(3)(c) of the Central Excise Act, 1944, which states that the place of removal is where the excisable goods are sold after clearance from the factory. The Tribunal noted that in this case, the goods were cleared on payment of duty from the factory but were not sold from the factory. The sale occurred either after the goods returned from the job worker to the appellant's factory or from their other unit. Therefore, the place from where the goods were sold was considered the "place of removal." As the transportation services (GTA) were used up to the place of removal, the Tribunal concluded that they qualified as input services eligible for Cenvat Credit. Consequently, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief in accordance with the law.