2016 (12) TMI 591 - AT - Central Excise

Disallowance of Cenvat credit - outward transport of finished goods - Held that - I find that the appellant is satisfying all the three conditions as prescribed under Circular dated 23/8/2007 and accordingly, place of removal shall be the premises of the buyers. Accordingly, the appellant appears to be entitled to cenvat credit on the output transport expenses, wherein the appellant paid the freight charges and service tax on the same, as the recipient of service. Accordingly, I remand the matter back to the adjudicating authority for verification of the facts as the documents being GR notes or lorry receipts and invoices are claimed to be filed before this Tribunal for the first time. The ld. Adjudicating Authority shall verify the claim from the documents and/or books of account as may be deemed fit and if it is found that the facts are as stated before this Tribunal, the authority shall pass the consequential order accordingly - appeal allowed by way of remand.

Issues:
Disallowance of Cenvat credit on outward transport of finished goods.

Detailed Analysis:
The appellant, a manufacturer of asbestos products, availed Cenvat credit on inputs and input services. The dispute arose when the revenue disallowed the Cenvat credit on outward transport of finished goods, claiming that the place of removal was the factory gate, and service tax paid on transportation beyond that point could not be treated as input service. A show cause notice was issued, leading to a demand confirmation of ?36,59,870/- with interest and a penalty. The Additional Commissioner noted the appellant's factory gate sale arrangement and upheld the demand. The appellant appealed to the Commissioner (Appeals), who also rejected the appeal, stating that transport charges were not included in the transaction value for duty payment. The appellant then approached the Tribunal, arguing that freight charges were included in the sale value, fulfilling the conditions of Circular No. 97/8/2007, and thus, they were entitled to credit for service tax paid on outward freight.

The appellant's counsel contended that freight was included in the sale value, as demonstrated by sample invoices and lorry receipts showing freight paid. It was emphasized that the revenue did not claim that freight was separately collected above the sale price. The appellant argued that they met all conditions of the Circular, making them eligible for the credit. The counsel criticized the Commissioner (Appeals) for stating that freight charges were not part of the transaction value for duty payment. The appellant sought the appeal's allowance with consequential benefits. On the other hand, the revenue's representative supported the impugned order and highlighted that documents like GR/lorry receipts and sale invoices were presented for the first time before the Tribunal.

After considering the arguments, the Tribunal found that the appellant satisfied the conditions outlined in the Circular, making the premises of the buyers the place of removal. Consequently, the appellant was deemed entitled to Cenvat credit on output transport expenses where they paid the freight charges and service tax as the service recipient. The matter was remanded to the adjudicating authority for verification of newly presented documents to ensure the appellant's claims were accurate. If the facts aligned with the submissions, the authority was directed to pass the consequential order accordingly. Ultimately, the appeal was allowed by way of remand.

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