2018 (6) TMI 247 - AT - Central Excise

GTA Service - CENVAT credit - input services - Outward transportation of goods up to the buyer s premises - period involved is after 01.04.2008 - whether the appellant is eligible to avail the Cenvat Credit of service tax paid on the GTA service received by them for outward transportation of final products from the factory gate up to the premises of the buyer when the sales are on FOR basis? - penalty. Held that - The said issue has been decided in the case of M/s. Ultratech Cement Ltd. 2018 (2) TMI 117 - SUPREME COURT OF INDIA by the Hon ble Apex Court, wherein it has been held that credit is eligible up to 01.04.2008 and after such date, the assessee is not eligible for credit - credit not allowed. Penalty - Held that - Taking into consideration that the issue was under litigation and was in favour of assessee at the Tribunal level as also decided by various High Courts and got settled only by the decision of the Hon ble Apex Court, the penalty imposed is unwarranted and requires to be set aside. Appeal allowed in part.

Summary

Issues:
Whether the appellant is eligible to avail Cenvat Credit of service tax paid on GTA service received for outward transportation of final products from the factory gate up to the buyer's premises when sales are on FOR basis.

Analysis:
The appellants, manufacturers of computer systems, availed Cenvat Credit on outward transportation of goods to the buyer's premises. The department issued show-cause notices, alleging the credit was not eligible. The original authority and Commissioner (Appeals) confirmed the demand. The appellant argued that the credit pertained to service tax paid on 25% of the gross amount of the freight charge, which was meager compared to the excise duty paid. The appellant contended that the definition of "place of removal" allowed for Cenvat Credit on transportation up to the buyer's premises. The appellant referenced judgments and circulars to support their claim.

The appellant highlighted an amendment in the definition of "place of removal" and contended that the buyer's premises could be considered as the place of removal for Cenvat Credit eligibility. The appellant argued that the Circular clarified the relevance of the buyer's place as the place of removal if certain conditions were met. The appellant distinguished a previous judgment, asserting that the Circular's clarification was not applicable post-amendment. The appellant emphasized that the Hon'ble Apex Court's decision did not address the specific issues raised in this case.

The learned AR supported the impugned order, citing a settled decision in the case of M/s. Ultratech Cement Ltd. The Tribunal noted that the issue pertained to post-April 2008 and referenced the Ultratech Cement Ltd. case, where the Hon'ble Apex Court held that credit was eligible until April 1, 2008, and not thereafter. The Tribunal, following the Apex Court's decision, held that the appellant was not eligible for credit post-April 2008. However, considering the issue's litigation history and the varied decisions before the Apex Court's ruling, the Tribunal found the penalty imposed unwarranted and set it aside while upholding the duty demand and interest.

In conclusion, the Tribunal partially allowed the appeal by setting aside the penalties but upheld the duty demand and interest. The judgment clarified the eligibility of Cenvat Credit for service tax paid on outward transportation up to the buyer's premises post-April 2008 based on the Hon'ble Apex Court's decision in the Ultratech Cement Ltd. case.