2023 (12) TMI 1332 - AT - Central Excise

CENVAT Credit - Goods Transport Agency GTA (outward Transport) service - whether the hearing and resolution of the issue referred to the Larger Bench be continued at the instance of the intervener or as the case of the appellant has been settled under SVLDRS subsequent to reference, the appeal be returned to the Referral Bench for disposal without answering the reference? HELD THAT - The present reference to the Larger Bench is on the issue of admissibility of CENVAT credit on the service tax paid on GTA (outward transportation of goods) service after delivery of the judgment of the Supreme Court in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. 2018 (2) TMI 117 - SUPREME COURT and the Circular of the Board dated 08.6.2018. Thus, resolution of the reference by the Larger Bench would not be limited to the appeal in which the reference has been made, but would have implication on all appeals pending before other Benches of the Tribunal involving same issue and are awaiting the outcome of the present reference. The decision in M/S KARAIKAL PORT PVT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY 2015 (1) TMI 87 - CESTAT CHENNAI is neither relevant nor applicable to the present circumstances. In that case, the applicant sought permission to be impleaded as a necessary party in the appeal filed by the Port Department, Karnataka on the ground that on confirmation of the service tax demand against the Port Department a notice was issued for recovery of the confirmed service tax. Consequently, the applicant approached the Tribunal to allow them to intervene in the appeal. The application was filed under Order 1 Rule 8A of the First Schedule to the Code of Civil Procedure. In a case where clearances of goods are against FOR contract basis, the authority needs to ascertain the place of removal by applying the judgments of the Supreme Court in COMMISSIONER CENTRAL EXCISE, MUMBAI-III VERSUS M/S. EMCO LTD. 2015 (8) TMI 200 - SUPREME COURT and COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. 2015 (4) TMI 857 - SUPREME COURT , the decision of the Karnataka High Court in BHARAT FRITZ WERNER LTD. AND MAPAL INDIA PRIVATE LIMITED VERSUS THE COMMISSIONER OF CENTRAL TAX, BANGALORE 2022 (7) TMI 352 - KARNATAKA HIGH COURT , and the Circular dated 08.06.2018 of the Board to determine the admissibility of CENVAT credit on the GTA Service upto the place of removal. The reference is answered, accordingly. The appeal shall now be listed before the Division Bench for hearing.

Summary

Issues Involved:
1. Eligibility of CENVAT credit on Goods Transport Agency (GTA) (outward transport) service.
2. Determination of the "place of removal" for CENVAT credit eligibility.
3. Whether the matter should be remanded to the adjudicating authority for fresh consideration.
4. Admissibility of intervention by a third party in the appeal.

Issue-Wise Detailed Analysis:

1. Eligibility of CENVAT Credit on GTA (Outward Transport) Service:
The primary issue revolves around the eligibility of CENVAT credit on GTA services for outward transportation of goods from the factory to the buyer's premises. The Tribunal referred to the Supreme Court's judgment in Ultratech Cement Ltd. [2018 (9) GSTL 337 (SC)], which held that CENVAT credit on GTA services availed for transport of goods from the place of removal to the buyer's premises was not admissible. This judgment was pivotal in the Tribunal's decision-making process, emphasizing that the place of removal should be determined to ascertain the eligibility of CENVAT credit.

2. Determination of the "Place of Removal":
The Tribunal had to consider whether the "place of removal" could be the buyer's premises in cases where goods are sold on a Freight on Road (FOR) basis. The Supreme Court's judgment in Ispat Industries Ltd. [2015 (324) ELT 670 (SC)] and the Circular dated 08.06.2018 from the Board were critical in this determination. The Circular clarified that the place of removal should generally be the manufacturer's premises unless the sale contract specifies otherwise, such as in FOR contracts where the seller retains ownership and risk until delivery to the buyer.

3. Remanding the Matter to the Adjudicating Authority:
The Tribunal discussed whether the matter should be remanded to the adjudicating authority to reconsider the issue in light of the Supreme Court's judgments and the Board's Circular. The Tribunal noted that various High Courts had different interpretations of the Ultratech Cement judgment, with some remanding the matter for fresh consideration. The Tribunal concluded that the place of removal should be determined based on the facts of each case, and thus, remanding the matter to the adjudicating authority was necessary for a thorough examination.

4. Admissibility of Intervention by a Third Party:
The Tribunal addressed whether a third party, M/s. Hindustan Zinc Limited, could intervene in the appeal. The authorized representative for the department opposed the intervention, arguing that the intervener was not an aggrieved party under section 86 of the Finance Act, 1994. However, the Tribunal allowed the intervention, referencing the Larger Bench decision in Kafila Hospitality & Travels Pvt. Ltd. vs. CST, Delhi [2021 (47) GSTL 140 (Tri. - LB)], which permitted intervention in cases where the outcome would impact other pending appeals. The Tribunal emphasized that the intervener had shown interest as similar issues were pending before other Benches.

Conclusion:
The Tribunal concluded that the eligibility of CENVAT credit on GTA services for outward transportation should be determined by ascertaining the place of removal based on the facts of each case, considering the Supreme Court's judgments and the Board's Circular. The matter was remanded to the adjudicating authority for fresh consideration. The intervention by M/s. Hindustan Zinc Limited was allowed, recognizing the broader implications of the Tribunal's decision on other pending appeals. The reference was answered accordingly, and the appeal was listed for hearing before the Division Bench.