2019 (5) TMI 1778 - AT - Central Excise

CENVAT Credit - GTA service or delivery of finished products from the factory of production to the premises of their buyer - place of removal - Change of opinion - extended period of limitation - contention of the appellant is that the place of removal is the buyer s premises and further allegation is that the credit was taken on outward freight with intention to evade payment of duty - HELD THAT - The show cause notice have been issued due to change of opinion on the part of the Department. It is not the case of contumacious conduct and suppression of facts. Further in view of the several other judgements and Circular of the Board dated 23.08.2007 it was provided that an appellant can take cenvat credit of outward transportation where the goods are delivered FOR and risk in transit is borne by the seller of the goods and the goods are accepted by the buyer at his door. The show cause notice is bad for invoking extended period of limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining the "place of removal" for allowance of credit in the case of delivery of finished products from the factory to the buyer's premises.

Analysis:
The appellant, engaged in manufacturing electrical transformers, sought clarification on the "place of removal" for credit allowance concerning delivery to the buyer's premises. The purchase order indicated prices for delivery FOR basis, inclusive of freight up to the buyer's site, with obligations for installation and commissioning at no extra cost. The buyer accepted the transformers post-installation and commissioning. The issue stemmed from litigations post-amendment in Rule 2(l) concerning input service up to the place of removal. The Supreme Court's rulings in various cases, including CCE Vs. M/s. Roofit Industries Ltd., emphasized determining the place of removal with reference to the point of sale, especially in FOR destination sales where seller retains ownership and risk until buyer acceptance. The Board's circular further clarified the application of these principles and exceptions in such cases.

The appellant had taken disputed credit during April-June 2012, duly recorded in their accounts and disclosed in returns. Show cause notices were issued post-audit in Feb. 2017, invoking extended limitation periods. The Department alleged that the credit was taken on outward freight to evade duty payment, claiming the place of removal as the buyer's premises. However, considering the appellant's compliance with Circulars and judgments allowing credit for outward transportation in FOR deliveries where risk in transit is borne by the seller until buyer acceptance, the show cause notice was deemed invalid for invoking extended limitation. The decision was based on legal interpretations and not contumacious conduct or suppression of facts, leading to the appeal's allowance and setting aside of the impugned order, entitling the appellant to consequential benefits.