2016 (6) TMI 468 - AT - Central Excise

Eligibility of Cenvat credit of services at their retail outlets from where sales are effected - No sales are effected at the factory gate but duty is paid at the time of clearance - Held that - since the goods are not sold at the factory gate but are sold at the retail outlets therefore by virtue of the express provisions of Section 4(3)(c)(iii) of the Central Excise Act 1944 the place of removal in the case of appellant will be the retail outlets from where goods are sold. Therefore the appellant has correctly availed CENVAT Credit on input services availed at the retail outlets which will be the place of removal in the present case. - Decided in favour of appellant with consequential relief

Summary

Issues:
- Eligibility of CENVAT Credit on services at retail outlets for a manufacturer of ready-made garments.

Analysis:
The appeal was filed against an Order-in-Original confirming a demand by denying CENVAT Credit on certain services along with interest and penalty under the CENVAT Credit Rules, 2004. The appellant argued that the place of removal should be the retail shops from where goods are sold, based on the definition provided in Section 4 (3) (c) of the Central Excise Act, 1944. The Adjudicating authority contended that the place of removal is the factory gate as duty is paid at the time of clearance from the factory.

The main issue was whether the appellant would be eligible for CENVAT Credit of services at their retail outlets where sales are made, despite duty being paid at the factory gate. The CENVAT Credit Rules state that input services availed by an assessee in or in relation to the manufacture of goods up to the place of removal are admissible. The definition of "place of removal" from Section 4 (3) (c) of the Central Excise Act, 1944 includes premises from where excisable goods are sold after clearance from the factory.

The Tribunal analyzed the case law and held that since goods were not sold at the factory gate but at the retail outlets, the place of removal for the appellant would be the retail outlets. This view was supported by the case law of Metro Shoes Pvt. Ltd. vs. Commissioner of Central Excise, Mumbai-i. The Tribunal emphasized that services utilized by the appellant until the retail outlets are considered as services used for the manufacture of final products and clearance from the place of removal.

Additionally, the Tribunal referred to the case of L.G. Electronics (India) Pvt. Ltd. vs. Commissioner of Central Excise, Noida, where it was held that if deliveries are on FOR destination basis, the point of sale will be the place of removal, allowing CENVAT Credit up to that point. Based on these precedents and legal interpretations, the Tribunal concluded that the appellant correctly availed CENVAT Credit on input services at the retail outlets, which were deemed as the place of removal in this case. Consequently, the appeal was allowed with any necessary relief granted.