2019 (7) TMI 325 - AT - Central Excise

CENVAT credit - input services - Outward Transportation of Goods up to the buyer s premises - sale on FOR basis - place of removal - Department was of the view that the place of removal can only be the factory gate - HELD THAT - It is not necessary that there should be a separate contract for supply of goods. The parties can agree to the terms and conditions of the sale in the purchase orders itself. This becomes a concluded contract when the offer is accepted by the supplier/buyer. Therefore, when the purchase orders itself show that the condition for sale is FOR basis, the observations made by the authorities below that the appellant has failed to produce any evidence/contract establishing that they have borne the freight charges, insurance, etc., is without any factual basis and unacceptable. Further, in the present case, letters/certificates have been obtained by the appellant from the purchasers of the goods showing that the purchasers have not paid any freight charges separately. This strongly implies that the appellants have borne the freight charges and have included it in the assessable value on which Excise Duty has been discharged by them. The decision of the Hon ble Apex Court in the case of M/s. Roofit Industries Ltd. 2015 (4) TMI 857 - SUPREME COURT will apply and the place of removal is the buyer s premises. In such circumstances, the decision of the Tribunal in the case of M/s. Ultratech Cement Ltd. 2019 (2) TMI 1487 - CESTAT AHMEDABAD squarely applies. The disallowance of credit is unjustified - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for credit of Service Tax on Outward Transportation of Goods up to the buyer's premises.

Analysis:
The case involved a dispute regarding the eligibility of the appellant for the credit of Service Tax on Outward Transportation of Goods up to the buyer's premises. The Department contended that the place of removal could only be the factory gate, and therefore, transportation beyond that point was not eligible for credit. A Show Cause Notice was issued, and after due process, the demand was confirmed along with interest and penalties by the Original Authority and the Commissioner (Appeals).

The appellant argued that they cleared goods on a FOR sale basis, where freight charges were included in the assessable value on which Excise Duty was discharged. They presented purchase orders and certificates from buyers to support their claim that they bore the freight charges and insurance, making them eligible for the credit. The appellant relied on relevant case laws and circulars to strengthen their argument.

Upon examination of the records, purchase orders, and evidence presented, the Tribunal found that the sale was indeed on a FOR basis. The Tribunal emphasized that it was not necessary to have a separate contract for the supply of goods, as terms and conditions could be agreed upon in the purchase orders themselves. The certificates obtained from buyers indicating no separate payment for freight charges supported the appellant's claim that they had included these charges in the assessable value.

Considering the facts and legal precedents, the Tribunal concluded that the appellant was eligible for the credit of Service Tax on Outward Transportation of Goods up to the buyer's premises. The Tribunal referenced specific judgments and a recent case where a similar issue was decided in favor of the assessee. Consequently, the Tribunal set aside the impugned order, allowing the appeal with consequential reliefs as per the law.

In summary, the Tribunal's decision favored the appellant, recognizing their eligibility for the credit of Service Tax on Outward Transportation of Goods up to the buyer's premises based on the sale being on a FOR basis and the evidence provided to support their claim.