2019 (5) TMI 868 - AT - Central Excise

CENVAT Credit - input services - outward transportation of goods (GTA Services) - agreement of sale on FOR Destination basis or not - reliance placed on the decision of the Bench in the case of M/S. MAHLE ENGINE COMPONENTS INDIA PVT. LTD. AND OTHERS VERSUS CCE ST, CHENNAI-III, COMMR. OF GST CE (CHENNAI OUTER) , CCE, CHENNAI NORTH, I, PUDUCHERRY 2019 (4) TMI 635 - CESTAT CHENNAI where it was concluded that the appellants should be given an opportunity to establish which is the place of removal for them and then look into the eligibility of credit on GTA Services availed for outward transportation up to the buyer s premises in the light of the Board s Circular dated 08.06.2018 - HELD THAT - The appellant to first establish whether there was an agreement or the purchase order wherein it is made clear as to the terms; and the manufacturer was required to deliver the manufactured goods at the buyer s premises; and then comes the transfer of ownership, which is to be ascertained - without examining these aspects, the observations of the adjudicating authority, cannot be sustained since the buyer s premises where the goods are alleged to have been delivered would at the most become the place of acceptance of supplies. Appeal allowed by way of remand.

Summary

Issues:
Denial of CENVAT Credit on outward transportation of goods (GTA Services).

Analysis:
The appellant challenged the denial of CENVAT Credit on the outward transportation of goods, arguing that the property in goods was transferred to the buyer at the buyer's place. The appellant's advocate contended that the adjudicating authority erred in holding the appellant responsible until the completion of delivery to the customer. The respondent's representative referred to a Tribunal case and a Board Circular for reconsideration.

The Division Bench considered previous Supreme Court judgments regarding the inclusion of costs in the assessable value and the eligibility of CENVAT credit on transportation services. The Bench emphasized the need to determine the place of removal for the appellant to assess the eligibility of credit on GTA Services up to the buyer's premises. The appellant was granted an opportunity to establish the place of removal and evaluate credit eligibility based on relevant judgments and circulars.

The adjudicating authority was directed to ascertain if the case involved GTA services and to consider the definition of "place of removal" as per applicable law. The authority was reminded of the Sale of Goods Act provisions to determine when ownership of goods transfers from seller to buyer. The judgment highlighted that sale at the factory gate versus the buyer's premises impacts valuation and ownership transfer. The authority was instructed to re-adjudicate the matter considering the Supreme Court decision and the Bench's order, setting aside the previous decisions and leaving all contentions open.

Ultimately, the appeals were allowed for remand, emphasizing the need for a fresh adjudication in light of legal principles and previous judgments. The matter was referred back to the adjudicating authority for a thorough re-examination.