2009 (7) TMI 129 - AT - Service Tax

Cenvat Credit Input Services GTA Outward Transportation - held that - appellant availed GTA service for outward transportation of liquefied gases (final products) from their factory to buyers premises - . These gases were to be maintained in liquid form at sub-zero temperatures and hence cryogenic tanks were used for their storage. These cryogenic tanks containing liquefied gases were mounted on goods transport vehicles belonging to GTA who transported the goods from the factory to the buyers premises. The liquids were transferred into cryogenic tanks installed in the customers premises which in some cases also belonged to the appellant and the customer paid rent in such cases. - In all cases the freight for the transportation of the goods was paid by the appellant and this amount was included in the assessable value of the goods for the purpose of payment of duty. In other words duty was paid on FOR destination basis - benefit of CENVAT credit is liable to be allowed to them in respect of GTA service availed for outward transportation

Summary

Issues: Admissibility of CENVAT credit for GTA service availed by the assessee for outward transportation of final products.

Analysis:

1. Issue of Admissibility of CENVAT Credit: The central question in this case revolved around the admissibility of CENVAT credit for the GTA service utilized by the appellant for transporting final products from the factory to the buyers' premises during a specific period. The original authority had denied this benefit to the assessee under Rule 14 of the CENVAT Credit Rules, 2004, along with imposing a penalty. However, in an appeal, the penalty was set aside, but the denial of CENVAT credit was sustained, leading to the present appeal.

2. Reference to High Court Judgment and Board's Circular: The appellant's counsel referred to a judgment by the Hon'ble High Court in a similar case involving Ambuja Cements Ltd. The Board's circular, specifically No. 97/8/2007-S.T., was also cited, which addressed a comparable scenario. The circular clarified that in situations where the seller retains ownership of goods until delivery to the purchaser and freight charges are integral to the goods' price, CENVAT credit on transportation expenses would be permissible to the manufacturer.

3. Application of High Court Ruling and Tribunal Precedent: The Tribunal noted that the High Court's ruling in the Ambuja Cements case was followed by a Larger Bench in a separate case involving ABB Ltd. The Larger Bench upheld the admissibility of CENVAT for manufacturers using GTA services for outward transportation of goods. Drawing on these precedents, the Tribunal applied the principles to the current case.

4. Factual Analysis and Decision: During the disputed period, the appellant had availed GTA services for transporting liquefied gases from the factory to buyers' premises. The goods were stored in cryogenic tanks and transported by GTA vehicles. The ownership of goods remained with the appellant until delivery, with freight costs included in the assessable value for duty payment. Based on invoices and agreements, it was established that the appellant met the conditions outlined in the Board's circular, making them eligible for CENVAT credit. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

In conclusion, the Tribunal's decision centered on interpreting relevant legal provisions, applying precedents, and analyzing the specific facts of the case to determine the admissibility of CENVAT credit for GTA services utilized by the appellant for outward transportation of final products.