2008 (8) TMI 66 - AT - Service Tax

Whether the respondents are eligible for cenvat credit of service tax paid on GTA services availed for the purpose of transportation of the finished goods from the factory to the consignment agent s premises - Circular No.137/3/2006-CX.4 dt. 2/2/2006 - In view of the fact that consignment agent premises is also defined as a place of removal and the property in the goods never passes to a consignment agent, respondents are eligible for the cenvat credit.

Summary

Issues:
Whether the respondents are eligible for cenvat credit of service tax paid on GTA services availed for the transportation of finished goods to the consignment agent's premises.

Analysis:
The main issue in this appeal before the Appellate Tribunal CESTAT AHMEDABAD was the eligibility of the respondents for cenvat credit on service tax paid for GTA services used in transporting finished goods to the consignment agent's premises. The Revenue argued that the Board's Circular No.137/3/2006-CX.4 only covers depots, not consignment agent premises. However, the respondents contended that consignment agent's premises are included as a place of removal according to the circular and that they should be eligible for the credit since the property in the goods never passes to the consignment agent.

During the hearing, both sides presented their arguments. The Revenue, through the Ld. JDR, emphasized that the circular specifically mentions depots and does not extend to consignment agent premises. On the other hand, the respondents, represented by their Advocate, pointed out para-3 of the circular which discusses the place of removal, including consignment agent's premises. They also highlighted that the transportation expenses are borne by the manufacturer in the case of consignment agents, and the property in the goods never transfers to them, supporting their claim for cenvat credit.

The Appellate Tribunal, in its decision, considered the definition of consignment agent premises as a place of removal and the fact that the property in the goods does not pass to the consignment agent. Based on these legal aspects, the Tribunal upheld the contention of the respondents, ruling that they are indeed eligible for the cenvat credit. Consequently, the appeal filed by the Revenue was rejected, affirming the order of the Commissioner (Appeals) in favor of the respondents.

In conclusion, the judgment by the Appellate Tribunal CESTAT AHMEDABAD clarified the interpretation of the circular regarding the eligibility of cenvat credit for service tax paid on GTA services used for transporting goods to consignment agent premises. The decision was based on legal considerations such as the definition of consignment agent premises as a place of removal and the non-transfer of goods' property to the consignment agent, leading to the rejection of the Revenue's appeal.