2018 (11) TMI 673 - AT - Central Excise

CENVAT Credit - input services - outward transportation of the final product directly to the customer on door delivery basis - Held that - Idetical issue decided in the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE AND SERVICE TAX, GUNTUR VERSUS M/S. THE ANDHRA SUGARS LTD. 2018 (2) TMI 285 - SUPREME COURT OF INDIA , where it was held that Once it is accepted that place of removal is the factory premises of the assessee, outward transportation from the said place would clearly amount to input service. That place can be warehouse of the manufacturer or it can be customer s place if from the place of removal the goods are directly dispatched to the place of the customer. Once such outbound transportation from the place of removal gets covered by the definition of input service - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of Cenvat Credit on service tax paid for outward transportation to customer on door delivery basis.

Analysis:
The appellant challenged the denial of Cenvat Credit amounting to ?1,03,160 on service tax paid for outward transportation of the final product directly to the customer. The dispute centered on the interpretation of Cenvat Credit rules regarding transportation charges. The appellant argued that during the relevant period (January 2007 to May 2007), Cenvat Credit was permissible on outward transportation "from the place of removal." The appellant contended that the amended notification no. 10/2018, effective from 01.03.2008, was incorrectly applied by the adjudicating authority to restrict input credit only up to the place of removal. The appellant referenced a judgment by the Punjab and Haryana High Court and a Supreme Court decision to support their claim that transportation from the place of removal qualifies as input service.

The respondent Department, represented by the Learned AR, supported the Commissioner (Appeals)'s findings. They argued that the appellant failed to provide evidence that the sale and transport of goods occurred at the purchaser's place, and ownership had not transferred to the buyer at their premises, making the credit inadmissible. However, after hearing both sides and considering relevant judgments, the Tribunal concluded that outward transportation from the place of removal, whether the manufacturer's warehouse or the customer's premises, qualifies as an input service. The Tribunal referenced a Supreme Court decision and a previous Tribunal ruling to support their decision.

In light of the Supreme Court judgment and the Tribunal's previous decision, the Tribunal allowed the appeal, setting aside the order of the Commissioner (Appeals) dated 28.11.2017. The Tribunal held that Cenvat Credit is admissible on service tax paid for outward transportation of the final product directly to the customer, affirming the appellant's position and resolving the dispute conclusively.