2017 (1) TMI 1069 - AT - Central Excise

Cement and clinker - CENVAT credit - GTA services - denial on the ground that the sale has happened at the factory gate and the credit of tax paid on GTA cannot be allowed - Held that - reliance placed by Revenue in the case of LAFARGE INDIA LTD Versus COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2014 (10) TMI 297 - CHHATTISGARH HIGH COURT , where it was held that in case of sale at the place of destination, the assessee is only entitled to claim credit of service tax on GTA, provided the amount paid was integral part of price of the goods - In the present case, the transportation cost has been included in the assessable value and as such the facts of the case is different from the one referred to by the Revenue. In the said case, it was clearly recorded that the freight charges were not integral part of the price of the goods. In case of transportation of Cement from the respondent s unit to customers premises on FOR destination basis, the credit was admissible as the sale has taken place when the customer takes delivery of the goods. The cost of transportation has been included in the assessable value and as such, the impugned order permitted the credit as legally eligible. Credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues: Eligibility of Cenvat credit on GTA Services for transportation of goods from factory to warehouse/depot/other unit.

Analysis:
1. The appeal concerns the eligibility of the respondent to avail credit on GTA service for transporting goods from the factory to other units. The Revenue contended that the "place of removal" should be determined based on the facts of each case and as per the definition under the Central Excise Act, 1944. They argued that since the goods were transported to a sister unit for further manufacture, the place of removal should be the factory of the manufacturer, not the receiving unit.

2. The Commissioner (Appeals) examined the legal provisions related to "input service" and "place of removal" and made findings accordingly. It was noted that the ownership and risk of loss/damage to the goods remained with the seller until delivery to the destination. The freight charges were considered an integral part of the goods' price. The Commissioner also highlighted that when goods were transported from the respondent's unit to customers' premises on a FOR destination basis, the credit was admissible as the sale occurred upon customer delivery. The transportation cost was included in the assessable value, making the credit legally eligible.

3. The Revenue referred to a decision by the Chhattisgarh High Court in the respondent's case, emphasizing that credit on GTA service is only allowed if the amount paid is an integral part of the goods' price. However, in the present case, it was established that the transportation cost was indeed included in the assessable value, distinguishing it from the case cited by the Revenue where freight charges were not integral to the goods' price.

4. Considering the arguments and findings, the Tribunal found no merit in the Revenue's appeal and dismissed it, upholding the eligibility of the respondent to avail Cenvat credit on GTA Services for transporting goods to various units. The decision was pronounced in open court on 30/12/2016.