2019 (4) TMI 1343 - AT - Central Excise

CENVAT Credit - input services - GTA and Courier Services which were used for transporting the finished goods up to the buyer s premises - place of removal - HELD THAT - Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT OF INDIA has held that the credit on outward transportation is eligible only up to the place of removal. When the goods are sold on FOR basis on the basis of purchase orders, the assessable value has to include freight charges to the buyer s premises. Thus, for valuation purposes, the purchase order can be looked into to decide whether the sale is on FOR basis. The same document can be relied upon for deciding the place of removal to determine the eligibility of credit on outward transportation also. The matter requires to be remanded to the Original Authority who is directed to look into the Circular as well as the documents produced by the appellant and determine the place of removal and then decide the issue of eligibility of credit on outward transportation of finished goods - Appeal allowed by way of remand.

Summary

Issues:
Eligibility of credit on outward transportation of goods up to the buyer's premises.

Analysis:
The case involved the appellants, engaged in manufacturing motor vehicle parts, availing CENVAT Credit of service tax paid on GTA and Courier Services for transporting finished goods to the buyer's premises. The Department contended that credit on outward transportation of goods is eligible only up to the place of removal. The Original Authority and Commissioner (Appeals) upheld the demand for recovery of credit. The appellant argued that the buyer's premises constituted the place of removal, supported by purchase orders. The Department, however, emphasized the need for documentary evidence to prove sales on FOR basis.

The Commissioner (Appeals) relied on the Supreme Court's decision in M/s. Ultra Tech Cement Ltd., stating that credit is eligible only up to the place of removal. A subsequent Circular clarified that the buyer's premises is the place of removal for valuation when goods are sold on FOR basis. Referring to M/s. Mahle Engine Components India Pvt. Ltd., the Tribunal directed authorities to determine the place of removal and then decide credit eligibility. The appellant's counsel asserted the sale was on FOR basis, supported by purchase orders.

The Tribunal emphasized that purchase orders indicating sales on FOR basis constitute a concluded contract where ownership transfers upon delivery at the buyer's premises. The absence of formal contracts does not negate the validity of purchase orders as evidence of sales terms. The Tribunal highlighted that freight charges to the buyer's premises must be included in assessable value for FOR basis sales, emphasizing the relevance of purchase orders in determining credit eligibility.

Consequently, the matter was remanded to the Original Authority to consider the Circular, review documents, and determine the place of removal for assessing credit eligibility on outward transportation of finished goods. The decision set aside the impugned order and allowed the appeal through remand for further adjudication.