2019 (7) TMI 1687 - AT - Central Excise

CENVAT Credit - input services - place of removal - warehousing service and inspection service - HELD THAT - There is no dispute to the fact that warehousing service and inspection service were received by the appellant and payment of the same was also borne by the appellant. These charges were not collected by the appellant from the customers. Since the warehousing facility availed by the appellant for storing the goods and from there the goods were sold to the customer, it cannot be said that the goods were sold from the factory gate. As regards the inspection charges, as per the agreement with the customers, the appellant are under obligation to carryout inspection at the customer s end in respect of the goods manufactured and supplied by them. The charges of the inspection is also borne by the appellant. In such case, the sale is clearly on FOR basis i.e. customer s place. Moreover, the inspection charge is not a service which is used for removal of the goods - The expenses towards both the services stand included in the assessable value. Therefore, both the services were clearly used in or in relation to the manufacture and sale of the goods. In given facts of the present case, the appellant are entitled for the Cenvat credit in respect of warehousing and in inspection services - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Admissibility of Cenvat credit on warehousing service and inspection service beyond the place of removal.

Analysis:
The case involved a dispute regarding the admissibility of Cenvat credit on warehousing service and inspection service received by the appellant beyond the place of removal. The appellant, engaged in manufacturing bearings and automobile parts, stored goods in a warehouse before selling them to customers. The appellant bore the charges for both warehousing and inspection services, claiming Cenvat credit on the expenses. The department contended that since these services were beyond the place of removal, credit was not admissible. The appellant argued that the charges for these services were included in the assessable value of the final products. The appellant maintained that the warehouse service was up to the place of removal, and the inspection service was solely for inspecting goods to be sold. The appellant cited relevant judgments to support their position. The Revenue reiterated that the services were received beyond the place of removal, thus credit was not admissible. The Tribunal examined the facts and found that the charges for both services were borne by the appellant and not collected from customers. The goods were not sold from the factory gate, and the inspection charges were for inspection at the customer's end. The Tribunal concluded that both services were used in relation to the manufacture and sale of goods, with expenses included in the assessable value. The Tribunal distinguished a previous judgment where inspection charges were not included in the assessable value, unlike the present case. Consequently, the Tribunal held that the appellant was entitled to Cenvat credit on warehousing and inspection services, setting aside the impugned order and allowing the appeals.