2017 (3) TMI 1126 - AT - Central Excise

CENVAT credit - GTA service - outward transportation of cement from the factory to the customer s premises - denial on the ground that the appellant s sales are not on FOR destination basis and that it is the factory gate which is the place of removal - Held that - In the light of the decision of the Hon ble High Court of Punjab and Haryana in the case of Ambuja Cements Ltd. Vs. UOI 2009 (2) TMI 50 - PUNJAB & HARYANA HIGH COURT , the appellant is entitled to avail Cenvat Credit on outward goods transportation agency services - as goods have been supplied by the appellant on FOR basis to the buyers place and included the value of transportation in the assessable value of the goods. Therefore, appellant is entitled to avail Cenvat Credit on outward goods transportation agency services - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Eligibility for Cenvat credit on service tax paid for GTA services availed for outward transportation of cement.
2. Interpretation of place of removal for determining eligibility for Cenvat credit.

Analysis:
1. The appellant, a cement manufacturer, claimed Cenvat credit on service tax paid for GTA services used for outward transportation of cement. The dispute arose regarding whether the appellant's sales were on FOR destination basis, entitling them to the credit. The Department argued that sales were not on FOR basis, making the appellant ineligible for the credit. A show cause notice was issued for recovery of allegedly wrongly availed credit and imposing penalties. The Commissioner held that GTA services were not input services, disallowing the Cenvat credit. The appellant contended compliance with CBC Circular and incurred transportation costs in the assessable value of goods at the buyer's place.

2. The Tribunal considered the decision in Ambuja Cements Ltd. case, where Cenvat credit on outward transportation agency services was allowed. Referring to the Madras Cements Ltd. case, the Tribunal emphasized that completion of sale at the buyer's destination, without additional charges for delivery, entitles the appellant to Cenvat credit. The Tribunal rejected the Department's argument based on the Sale of Goods Act, stating that the intention of parties for sale completion at the buyer's address is crucial. The Tribunal held that the appellant's sales were on FOR basis, including transportation value in the assessable value of goods, making them eligible for Cenvat credit on outward transportation services. The impugned order was set aside, allowing the appeal with consequential relief.