2018 (2) TMI 1394 - AT - Central Excise

CENVAT credit - input services - GTA Service - reverse charge mechanism - Held that - The definition of input service was amended vide N/N. 10/2008-CE(N.T.), dated 01.03.2008, w.e.f. 1.4.2008. The effect of amendment was that the Phrase from the place of removal was substituted by upto the place of removal . As per the amended provisions of definition of input service , service tax paid on freight for transportation of goods upto the place of removal should only merit consideration as input service - the freight paid by the appellant from 1.4.2008 to 10.07.2014 should merit consideration as input service and service tax paid thereon should be eligible for cenvat credit - credit allowed. With regard to the period after 11.07.2014, though the place of removal was specifically defined in Rule 2(qa) of the CCR 2004, but on analysis of such definition Clause, the CBEC vide Circular dated 20.10.014 has clarified that the place, where sales have taken place or when the property in goods passes from the seller to the buyer, is relevant consideration to determine the place of removal . On perusal of the said clarification of the Board, it reveals that there is no difference between the amendment in the definition of input service effective upto 10.07.2014 and the amendment brought out on 11.07.2014 - However, since the appellant, at this juncture, has not produced all the copies of the purchase orders/invoices in respect of all the buyers and only submitted sample copies issued by few numbers of buyers, the matter should go back to the Original Authority for verification of the purchase orders/invoices in respect of the buyers, to whom the goods were sold by the appellant on FOR destination basis - matter on remand. Appeal allowed in part and part matter on remand.

Summary

Issues Involved:
Identification of "input service" for availing cenvat credit on outward freight paid by the appellant.

Detailed Analysis:

1. Issue of Identifying "Place of Removal" for Cenvat Benefit:
- The appellant, engaged in manufacturing dry battery cells, avails services of a goods transport agency for delivery at buyer's premises, discharging service tax liability under Reverse Charge Mechanism.
- Department issued show cause notices seeking disallowance of cenvat credit on outward freight, alleging it does not conform to the definition of "input service."
- Adjudicating Authority confirmed demand, penalties imposed, and subsequent appeals led to the Tribunal.
- Appellant argues that freight for delivery at buyer's premises should be considered "place of removal" for cenvat benefit, citing relevant case laws and circulars.
- Revenue contends that submitted documents are insufficient for verification.
- Tribunal analyzed the definition of "input service" under Cenvat Credit Rules, 2004, and relevant case laws.
- For the period up to March 2008, the factory gate was considered the "place of removal," entitling cenvat credit on service tax paid on outward freight.
- Post-amendment in 2008, "upto the place of removal" was the new criteria, and delivery at buyer's premises was deemed the relevant "place of removal" for cenvat benefit.
- Even after a subsequent amendment in 2014, the ownership transfer at buyer's premises was crucial for considering the freight as "input service."

2. Verification of Purchase Orders/Invoices:
- Tribunal noted that only sample copies of purchase orders/invoices were submitted, necessitating verification for all buyers.
- Original Authority directed to verify documents for ownership/title transfer at buyer's premises to determine cenvat credit eligibility.
- Remand ordered for post-2014 period to ensure proper verification and fresh adjudication.

3. Decision and Conclusion:
- Appeals allowed for cenvat credit up to April 2008, while post-2008 period remanded for further verification.
- Original Authority instructed to complete adjudication within three months, granting appellant a personal hearing.

In summary, the Tribunal's judgment revolved around defining the "place of removal" for cenvat benefit on outward freight paid by the appellant, emphasizing ownership transfer at buyer's premises as a crucial factor. The case involved analysis of relevant legal provisions, case laws, and circulars, with a directive for thorough verification of purchase orders/invoices by the Original Authority for proper adjudication.