2016 (11) TMI 479 - AT - Central Excise

Denial of CENVAT credit - service tax paid on transportation of goods from factory to warehouse - input services - whether the service tax paid on GTA services on the outward freight from the factory to the warehouse are eligible as input service? - place of removal of goods - Held that - place of removal in the case of the assessee is not the factory gate rather it is the warehouse or the depot from where the goods are sold to ultimate consumers or buyers. Further, in view of the various judgments it was held that the place of removal extends to customer premises. Moreover the Circular No.988/12/2014-CX dated 20.10.2014 which has been relied upon by the assessee issued by the Board clearly states that the CENVAT credit of service tax paid on goods transported from factory to depot is admissible irrespective of basis of valuation of goods - the impugned orders in the appeals filed by the assessee are not sustainable in law and I set aside the impugned orders by allowing the appeals of the assessee with consequential relief, if any. As far as appeals filed by the Revenue are concerned, I do not find any infirmity in the impugned orders passed by the Commissioner (A) therefore I uphold the impugned orders and dismiss the Revenue s appeals.

Summary

Issues:
Denial of CENVAT credit by lower authorities, interpretation of "place of removal," validity of impugned orders, applicability of Circulars and judicial precedents.

Analysis:
In this judgment, the Appellate Tribunal CESTAT Bangalore addressed four appeals concerning the denial of CENVAT credit, with identical issues in all appeals. The dispute centered around the eligibility of CENVAT credit for service tax paid on transportation of goods. The first two appeals involved the denial of credit by lower authorities, while the subsequent two appeals dealt with the acceptance of credit eligibility for the same issue. The Tribunal consolidated the appeals for a common order, focusing on Appeal No. E/2594/2011 for reference.

The appellant, a cigarette manufacturer, availed CENVAT credit for service tax on goods transportation from factory to warehouse. The Additional Commissioner issued a show-cause notice challenging this credit. Despite the appellant's arguments on the broad definition of input service and the warehouse as the place of removal, the adjudicating authority confirmed the demand. The Commissioner (A) upheld this decision, leading to the current appeals.

During the hearing, the appellant's counsel argued that the impugned order disregarded relevant provisions, judicial precedents, and CBEC Circulars. They contended that the warehouse constituted the place of removal for CENVAT purposes, supported by various invoices and documents. The counsel cited multiple court and tribunal judgments to bolster their case. They emphasized that the impugned order contradicted established legal principles and the CBEC Circulars endorsing CENVAT availability.

Conversely, the Revenue's representative maintained that the factory gate was the place of removal, making CENVAT credit on GTA services impermissible. They highlighted the specific duty levied at the factory gate and the subsequent sale arrangements by the appellant.

After deliberation, the Tribunal focused on determining whether the service tax on outward freight from the factory to the warehouse qualified as input service. It analyzed the concept of "place of removal," ultimately siding with the appellant's interpretation that the warehouse or depot constituted the place of removal for selling goods. Relying on various judicial precedents and CBEC Circulars, the Tribunal found the impugned orders unsustainable for the appellant and upheld them for the Revenue's appeals.

In conclusion, the Tribunal disposed of all four appeals, setting aside the impugned orders for the appellant and upholding them for the Revenue. The judgment emphasized the significance of the place of removal in determining CENVAT credit eligibility, supported by legal principles and Circulars.

This comprehensive analysis showcases the Tribunal's detailed examination of the issues involved, considering legal provisions, precedents, and Circulars to render a well-founded decision on the denial of CENVAT credit and the interpretation of the place of removal in the context of the appeals.