2018 (7) TMI 910 - AT - Central Excise

CENVAT Credit - Input service - GTA Service - It is the case of the Revenue that the assessee merely arranges for transportation of the goods on behalf of the consignee and was authorized to release payment of transportation on behalf of the customers - Held that - The transaction of transportation of goods from factory gate to customer s premises involves transporters as service provider and the respondent assessee as service receiver, and transporters have no relation with the customers. The issue is no more res-integra in view of the decision of the Hon ble Supreme Court of India in the case of the Commissioner of Central Excise, Belgaum Versus Vasavadatta Cements Ltd. 2018 (3) TMI 993 - SUPREME COURT , where it was held that the expression used in the aforesaid Rule is from the place of removal . It has to be from the place of removal upto a certain point. Therefore, tax paid on the transportation of the final product from the place of removal upto the first point, whether it is depot or the customer, has to be allowed. Credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. CENVAT Credit availed on Service Tax paid on outward freight for export of goods from factory to the port.
2. CENVAT Credit availed on Service Tax paid on outward transportation of goods by road up to the destination of their customer after sale from factory gate.

Detailed Analysis:

1. CENVAT Credit on Service Tax for Outward Freight for Export:
The respondent assessee sent finished excisable goods through a transport agency to the port for export and claimed CENVAT Credit on the Service Tax paid for this transportation. The Revenue argued that the assessee merely arranged transportation on behalf of the consignee and was authorized to release payment on behalf of customers. A Show Cause Notice was issued to disallow this credit under Rule 14 of the CENVAT Credit Rules, 2004, along with interest and penalty. The Adjudicating Authority dropped the proceedings initiated by the Show Cause Notice. The Tribunal found that the transportation of goods from the factory gate to the customer’s premises involves the transporters as "service providers" and the assessee as the "service receiver," with no relation to the customers. The Tribunal referenced the Hon’ble Supreme Court’s decision in Commissioner of Central Excise, Belgaum vs. Vasavadatta Cements Ltd., which clarified that services rendered by the manufacturer from the place of removal till it reaches its destination fall within the definition of "input service."

2. CENVAT Credit on Service Tax for Outward Transportation by Road:
The respondent assessee also claimed CENVAT Credit on Service Tax paid for transporting goods by road to their customers after sale from the factory gate. The Tribunal reiterated that the definition of "input service" includes services used in relation to the clearance of final products from the place of removal and outward transportation up to the place of removal. The Tribunal cited the Hon’ble Supreme Court’s decision in Cus., C. Ex. & S.T., Guntur vs. Andhra Sugars Ltd., which upheld that service used for the clearance of final products "from the place of removal" to the customer’s premises is eligible for CENVAT Credit. The Tribunal also referred to Circular No. 97/8/2007-S.T., which clarified that credit on service tax paid on outward transportation is admissible if the sale occurs at the customer’s place, considering ownership, risk during transit, and freight charges as part of the price.

Conclusion:
The Tribunal, following the Supreme Court’s rulings and the CBEC Circular, concluded that the transportation services from the place of removal to the customer’s premises qualify as "input services" under the CENVAT Credit Rules, 2004. Therefore, the Tribunal upheld the Adjudicating Authority’s decision and dismissed the Revenue’s appeal, affirming the respondent assessee’s eligibility to claim CENVAT Credit on the Service Tax paid for outward freight and transportation services.