2016 (8) TMI 580 - AT - Central Excise

Availment of cenvat credit of service tax paid - outward transportation of goods - goods supplied on FOR destination basis - the freight element included in the assessable value - duty liability discharged - Held that - by applying the judgment of Hon ble Punjab & Haryana High Court in the case of Ambuja Cement Ltd. vs. Union of India 2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT , the principles enunciated are that outward transportation service utilized by the manufacturer for transportation of finished goods from the place of removal up to the premises of the purchaser is covered within the definition of input service. - Decided in favour of appellant

Summary

Issues: Availment of cenvat credit of service tax paid on outward transportation of goods.

The judgment revolves around the dispute concerning the availment of cenvat credit of service tax paid on outward transportation of goods. The appellant argued that since the freight charges incurred by them were an integral part of the price of goods and the property in goods passed at the buyer's premises, the GTA service should be considered an input service for cenvat credit. The appellant relied on the judgment of the Hon'ble Punjab & Haryana High Court and a circular issued by the C.B.E.C. to support their claim.

The Commissioner (Appeals) had denied the cenvat credit, stating that there was a lack of documentary evidence to prove that the sale took place at the buyer's premises and that the property in goods was transferred there. However, the Tribunal found that the purchase orders clearly indicated that the goods were supplied on a "FOR at our works" basis, with the freight element to the account of the appellant. The Tribunal also noted that the Central Excise duty had been charged on the assessable value of goods without a separate mention of the freight element in the invoices.

The Tribunal further highlighted that the ownership and title of goods remained with the appellant until delivery at the customer's premises, as evidenced by the purchase orders and invoices. The pre-printed disclaimer regarding loss of goods during transit on the invoices was considered a clerical error and not a valid reason to disallow cenvat credit on GTA service. The Tribunal referenced a circular by the C.B.E.C. clarifying conditions for admissibility of cenvat credit on transportation service up to the place of removal, emphasizing the importance of ownership, risk, and integration of freight charges in the price of goods.

Ultimately, the Tribunal concluded that the principles enunciated in the judgment relied upon by the appellant applied to the present case, where outward transportation service up to the purchaser's premises qualified as an input service. Consequently, the impugned order denying cenvat credit was set aside, and the appeal was allowed in favor of the appellant with any consequential relief as per law.