2016 (10) TMI 508 - AT - Central Excise

CENVAT credit - outward transportation of finished goods from factory to the premises of the buyer - extended period of limitation - place of removal - conditions to be complied with as set out by the CBEC Circular when the manufacturer claims that the sale has taken place at the destination point in terms of the sale agreement, so as to conclude that CENVAT credit admissible, namely (i) the ownership of goods and the property in goods remained with the seller of the goods till the delivery of goods, (ii) the seller bore the risk of loss or damage to the goods during transit to the destination, (iii) the freight charges were an integral part of the price of goods - Held that - all the conditions satisfied to claim CENVAT credit - the freight charges is included in the assessable value - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to Cenvat credit on outward transportation for finished goods.

Analysis:
The issue in this appeal revolves around the entitlement of the appellant to take Cenvat credit on outward transportation for finished goods during a specific period. The Revenue observed that the appellants availed Cenvat credit on service tax paid on outward freight. A show cause notice (SCN) was issued involving the extended period due to the factory being considered the place of removal.

The appellants contested the SCN, arguing that as per the Purchase Order from the buyer, the goods were to be delivered at the buyer's premises. They relied on a CBEC Circular which outlined conditions under which credit of service tax paid on transportation would be admissible. The SCN was adjudicated, and the demand was confirmed with penalties and interest. The appeal before the Commissioner (Appeals) was dismissed on the grounds that freight charges were not included in the assessable value of excisable goods, indicating that the place of removal was the buyer's place.

The appellant's counsel argued that the goods were delivered at the buyer's premises, and the risk during transit was on the seller, meeting the conditions outlined in the CBEC Circular. They presented sample purchase orders and invoices to support their claim. The Revenue, however, relied on the impugned order.

Upon considering the contentions, the Tribunal found that the conditions for availing Cenvat credit were met. The ownership of goods remained with the seller until delivery, the risk during transit was borne by the seller, and the freight charges were integral to the price of goods, as evidenced by the sample invoices. The Tribunal concluded that the Commissioner (Appeals) erred in upholding that freight charges were not included in the assessable value.

Consequently, the appeal was allowed, and the impugned order was set aside, granting the appellant consequential benefits in accordance with the law. The Tribunal's decision favored the appellant, emphasizing the fulfillment of conditions necessary for claiming Cenvat credit on outward transportation for finished goods.