2024 (10) TMI 143 - AT - Central Excise

CENVAT Credit - Goods Transport Agency services for outward transportation of goods - place of removal - period February 2016 to March 2017 - HELD THAT - The credit of GTA services hinges on the term Place of Removal under Section 4 of the Central Excise Act, 1944, the CENVAT Credit Rules, 2004 and the CENVAT Credit Rules, 2017. The same was examined by the Board vide Circular No.1065/4/2018-CX, F. No.116/23/2018-CX-3, 8th June, 2018 in the light of the following judgments of the Hon ble Supreme Court in the case of CCE vs M/s Roofit Industries Ltd 2015 (4) TMI 857 - SUPREME COURT , CCE vs Ispat Industries Ltd 2015 (10) TMI 613 - SUPREME COURT , CCE, Mumbai-III vs Emco Ltd 2015 (8) TMI 200 - SUPREME COURT and CCE ST vs. Ultra Tech Cement Ltd 2018 (2) TMI 117 - SUPREME COURT , in order to bring clarity to the matter. At para 3 of the Circular, it was stated that the principle laid by the Hon ble Supreme Court was that the place or premises from where excisable goods are to be sold can only be manufacturer s premises or premises referable to the manufacturer. As per the analysis of the various judgments by Board s Circular dated 8.6.2018, in the case of consignments that have been sold on an FOR basis, where the ownership, risk in transit, remained with the seller till goods are accepted by buyer on delivery and till such time of delivery, seller alone remained the owner of goods retaining right of disposal, the benefit of CENVAT credit has to be extended to the seller on the basis of facts of the case and the place of removal has to be recognized as the buyers premises. The impugned order is set aside - appeal allowed.

Summary

Issues:
1. Eligibility of CENVAT credit on Goods Transport Agency services for outward transportation of goods.
2. Interpretation of the term "Place of Removal" under the Central Excise Act, 1944 and CENVAT Credit Rules.
3. Application of Supreme Court judgments in determining the eligibility of CENVAT credit.
4. Compliance with Circulars issued by the Board in relation to CENVAT credit.

Analysis:

The appeal before the Appellate Tribunal CESTAT Chennai involved the eligibility of CENVAT credit on Goods Transport Agency (GTA) services for outward transportation of goods by M/s. Rane Brake Lining Ltd. The appellant had availed CENVAT credit on GTA services, but the department contended that the service was not eligible as per Rule 2(l) of the CENVAT Credit Rules, 2004. The matter had undergone multiple rounds of litigation, including remand to the adjudicating authority based on the Supreme Court judgment in 'Roofit Industries.' The appellant argued that the lower authority had not followed the directions of the Tribunal and had relied on the Ultra Tech Cements Ltd. judgment instead of 'Roofit Industries.' The appellant also cited precedents where credit on outward GTA services had been allowed by the Tribunal and lower adjudicating authorities.

The Authorized Representative for the respondent argued that the lower authority was not precluded from considering other relevant Supreme Court judgments, including Ultra Tech Cements Ltd., which held that no CENVAT credit is admissible for transport of goods to the buyer's premises in FOR destination sales. The representative contended that the issue was settled by the Ultra Tech Cements Ltd. judgment and should lead to the rejection of the appeal.

The Tribunal analyzed the issue by considering the term "Place of Removal" under the Central Excise Act, 1944 and the relevant CENVAT Credit Rules. Referring to Circulars issued by the Board and various Supreme Court judgments, the Tribunal highlighted that in cases of FOR destination sales where the seller retains ownership and risk in transit until delivery at the buyer's premises, CENVAT credit should be extended to the seller. The Tribunal referred to a Larger Bench decision that emphasized determining the place of removal based on judgments in Emco and Roofit Industries.

Ultimately, the Tribunal found that the Original Authority and Commissioner Appeals had erred in not considering the Circulars issued by the Board and the precedents set by the Tribunal in similar cases. The Tribunal noted that the facts of the case satisfied the exceptions outlined in the Circular and the legal position was clear. Therefore, the Tribunal set aside the impugned order and allowed the appeal, granting the appellant consequential relief as per the law.

In conclusion, the Tribunal's decision emphasized the importance of applying relevant Supreme Court judgments, Circulars issued by the Board, and precedents set by the Tribunal in determining the eligibility of CENVAT credit on GTA services for outward transportation of goods in FOR destination sales. The judgment provided clarity on the interpretation of the term "Place of Removal" and highlighted the significance of adhering to legal principles and precedents in such matters.