2019 (10) TMI 590 - AT - Service Tax

CENVAT Credit - input services - outward transportation of goods from the factory/depot to the customers premises/port of shipment - place of removal - period from June 2007 to April 2008 - HELD THAT - The appellant is entitled to cenvat credit of service tax paid on outward transportation of goods from the place of removal up to 31.03.2008 in view of the decision of the Hon ble Apex Court 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 and also the decision of the Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BANGALORE VERSUS M/S ABB LTD. AND OTHERS 2011 (3) TMI 248 - KARNATAKA HIGH COURT . Further, the Hon ble Apex Court and the High Court of Karnataka in the aforesaid decision, also allowed the credit of service tax availed on transportation of goods up to customer s premises. Eligibility of cenvat credit of service tax on transportation of goods up to the customer s premises after the period w.e.f 01.04.2008 - HELD THAT - In view of the various decisions of the Board Circular No. 1065/4/2018-CX dated 08.06.2018, the matter needs to be remanded to the original authority to verify certain factual aspects such as whether the sale is on FOR basis, whether the freight is integral part of the sale price, whether the Customs duty paid on the value inclusive of freight amount etc. Appeal is partly allowed in favour of the appellant for the period upto 31.03.2008 and partly remanded back to the original authority to pass a fresh order for the period April 2008.

Summary

Issues:
Appeal against denial of cenvat credit on outward transportation of goods, liability to pay interest and penalty under Cenvat Credit Rules, 2004 and Finance Act.

Analysis:
The appeal challenged the Commissioner's order denying cenvat credit on outward transportation of goods from the factory/depot to customers' premises/port of shipment. The Commissioner held the credit disallowed under Rule 14 of Cenvat Credit Rules, 2004 and Section 73(1) of the Finance Act, imposing interest and penalty. Appellants, engaged in manufacturing HR Coils/Sheets/Plates, availed cenvat credit on inputs, capital goods, and input services, including service tax on transportation. The Commissioner disallowed the service tax credit, stating it did not fall under 'input service' and that the place of removal was the factory/depot, except for exports where the port was considered the place of removal.

The appellant argued that they were entitled to cenvat credit of service tax paid on outward transportation up to 31.03.2008, citing precedents such as CCE Vs. ABB Ltd. and Commr. of Cus. C.Ex. & S.T., Guntur Vs. Andhra Sugars Ltd. The appellant contended that the place of removal for exports was the port, supported by decisions like Commissioner Vs. Dynamic Industries Ltd. and others. They emphasized that for sales on FOB basis, the buyer's premises constituted the place of removal. Referring to various judgments, the appellant sought credit for transportation to customer's premises even post 01.04.2008.

The Tribunal found in favor of the appellant, allowing cenvat credit on outward transportation up to 31.03.2008 based on Apex Court and High Court decisions. The Tribunal held that services received or rendered from the place of removal till reaching the destination fell within 'input service' definition. Denial of credit up to the port for exports was set aside. However, eligibility for cenvat credit post 01.04.2008 was remanded to verify factual aspects like sales basis, freight inclusion in sale price, and Customs duty payment. The Tribunal partly allowed the appeal for the period up to 31.03.2008 and remanded the matter for April 2008, considering all appellant-relied decisions.

In conclusion, the appeal was partly allowed for the period up to 31.03.2008, and remanded for April 2008 to examine factual aspects as per Board Circular and various decisions cited by the appellant.