2016 (1) TMI 764 - AT - Central Excise

CENVAT Credit on GTA services - Disallowance of credit on service tax paid on GTA Services in respect of outward transportation services - Held that - Undisputedly the transactions are FOR destination and the value of the goods include cost of transportation upto destination plus insurance. The Board has issued a Circular No. 97/6/2007-ST dated 23.8.2007, wherein it is clarified that the GTA service availed for outward transportation of the goods from the factory/depot to the customer s premises would be treated as input service only when the place of removal of the goods is the customer s premises or in other words the sale transaction is on FOR destination basis. Thus as per the clarification, if assessable value of the goods on which duty is paid is the FOR destination price, the credit on the service tax paid on freight upto buyer s door step would be admissible. The Hon ble High Court in the case of CCE Vs. Parth Poly Wooven (P) Ltd, (2011 (4) TMI 975 - GUJARAT HIGH COURT ) has categorically held that the outward transport service used by the manufacturers for transportation of finished goods from the place of removal upto the premises of the purchaser is covered within the definition of input service provided in Rule 2(1) of the Cenvat Credit Rules, 2004. - Decided in favour of assessee.

Summary

Issues involved: Availment of Cenvat credit on service tax paid on GTA services for outward transportation services.

Analysis:
1. Facts and Background: The appellant, a manufacturer of copper articles, availed Cenvat credit on service tax paid for GTA services in relation to outward transportation. The audit revealed this discrepancy, leading to show cause notices, disallowance of credit, recovery orders, interest imposition, and penalty. The issue was whether the appellant was eligible for credit on outward transportation services.

2. Appellant's Argument: The appellant contended that they sell goods on a FOR destination basis, bearing the cost of transport to the customer's door, with ownership and responsibility for goods till delivery. They argued that central excise duty is paid at the customer's door, making outward freight an 'input service' eligible for credit. They cited judgments supporting their position, including Commissioner of Excise & Customs Vs. Parth Poly Wooven (P) Ltd. and a case involving M/s Shree Cable & Conductor (P) Ltd.

3. Revenue's Argument: The Revenue supported the disallowance of credit, citing Central Excise, Kolkata Vs. Vesuvious India Ltd, which held that services for delivering goods to the destination were not covered under the definition of input service. They argued that credit was rightly denied.

4. Judgment and Analysis: The Tribunal noted a previous case where credit on outward transportation services was allowed for a similar transaction. Referring to Circular No. 97/6/2007-ST, it clarified conditions for treating a transaction as FOR destination basis, including ownership retention, risk-bearing, and freight charges being part of the price. The Tribunal also cited the High Court's rulings in CCE Vs. Parth Poly Wooven (P) Ltd and Vesuvious India Ltd, supporting credit eligibility for outward transportation services.

5. Conclusion: Based on the precedents and the specific circumstances of the case, the Tribunal held that the appellant was entitled to the credit on outward transportation services. The impugned orders disallowing the credit were set aside, and the appeals were allowed with consequential reliefs, if any. The judgment was pronounced on 29.9.2015 by Sulekha Beevi CS, Member (J) of the Appellate Tribunal CESTAT New Delhi.