2018 (11) TMI 1603 - AT - Central Excise

CENVAT Credit - place of removal - FOR destination sales - denial on the ground that place of removable is the factory gate and no cenvat credit is available to the assessee beyond the place of removal i.e. factory gate - Held that - The appellants were owner of the goods till delivery of these goods to the buyers and the goods have been delivered to the buyer at buyer s place which is not disputed by the Revenue. In that circumstances place of removal is buyer s place. As it has been decided that place of removal is buyer s place therefore following the analogies of this Tribunal i.e. in the case of export the port of export has been held as place of removal of goods it is held that any expenses incurred by the seller of the goods till the buyer place is entitled to avail cenvat credit. The appellants are entitled to avail cenvat credit on outward transportation charges in case the appellant is having the ownership of the goods till delivery of the goods to the buyers in terms of the Notification No. 1065/04/2018-cx dated 08.06.2018 - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat credit denial on outward transportation for FOR destination sales.

Analysis:
The appellants appealed against orders denying cenvat credit on outward transportation for FOR destination sales, arguing that they should be entitled to the credit. The Revenue contended that the place of removable is the factory gate, and no credit is available beyond that point. The facts in all appeals were identical, so they were disposed of by a common order. The appellants were manufacturing excisable goods and delivering them on FOR basis to buyers, bearing transportation costs until the goods reached the buyer's factory gate. The Revenue alleged that the place of removable was the factory gate, hence denying cenvat credit on outward transportation charges. The adjudicating authority relied on previous decisions and held against the appellants.

The appellant's counsel referred to Circular number 1065/04/2018-CX, stating that the place of removal for cenvat credit on outward transportation should be determined based on the specific circumstances of each case, rather than applying a general rule. The AR argued that the place of removal was the factory gate since the supplier lost ownership of the goods upon handing them to the transporter. The Tribunal heard both parties and considered their submissions.

The Tribunal found that the appellants had received purchase orders requiring delivery of goods at the buyer's place on FOR basis. As the appellants bore transportation charges and retained ownership of the goods until delivery at the buyer's premises, the place of removal was deemed to be the buyer's place. Following the Tribunal's analogies, it was held that any expenses incurred by the seller until delivery to the buyer's place entitled them to avail cenvat credit. Therefore, the appellants were allowed cenvat credit on outward transportation charges, provided they retained ownership until delivery, as per Notification No. 1065/04/2018-cx. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential relief.