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2024 (10) TMI 617 - AT - Central ExciseCENVAT Credit - GTA Services - outward freight - clearance of the goods from their premises to the depots or to the premises of the customers on FOR basis - period 2012-13 to 2016-17 - HELD THAT - The reason for denial of the said credit is in the decision of the Hon ble Supreme Court in the case of M/s Ultratech Cement Ltd 2007 (3) TMI 738 - CESTAT AHMEDABAD . However, it is also noted that this issue has been finally clarified by the Board by Circular No.1065/4/2018-CX dated 08.06.2018. After taking note of the decision of the Hon ble Supreme Court in the case of Ultratech Cement Ltd. and COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. 2015 (4) TMI 857 - SUPREME COURT it was clarified that ' after amendment of in the definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004, effective from 01.03.2008, the service is treated as input service only up to the place of removal .' Undisputedly in the present case the supplies were made on FOR basis and the value of the goods for payment of duty determined accordingly. In view of the clarification, it is clear that Cenvat credit in case where supplies were made on FOR basis to the premises of the customers Cenvat credit of the GTA Services shall be admissible. There are no merits in the impugned order - appeal allowed.
Issues Involved:
1. Eligibility for Cenvat credit on outward freight for transportation of goods to customer premises on FOR basis. 2. Interpretation of "place of removal" in the context of Cenvat credit eligibility. 3. Impact of Supreme Court judgments and CBEC Circulars on the eligibility of Cenvat credit for Goods Transport Agency services. Issue-wise Detailed Analysis: 1. Eligibility for Cenvat Credit on Outward Freight: The core issue in this case revolves around the eligibility of M/s Dalla Cement Factory for availing Cenvat credit on Goods Transport Agency (GTA) services for outward freight, specifically for transportation of goods to customer premises on a Free on Road (FOR) basis. The Commissioner of Central Excise & CGST, Varanasi, in the impugned order, denied the Cenvat credit amounting to Rs.14,89,613/- for the period 2012-13 to 2016-17, citing that the credit availed on outward freight does not qualify as input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The appeal challenges this denial, arguing that the supplies were made on an FOR basis, which should allow for the Cenvat credit on the GTA services used. 2. Interpretation of "Place of Removal": The determination of the "place of removal" is crucial in deciding the eligibility for Cenvat credit on outward freight. The original definition of "input service" included services used for the clearance of final products "from the place of removal." However, post-amendment in 2008, the definition was altered to include services only "up to the place of removal." This change significantly impacts the eligibility for credit on outward transportation. The Supreme Court in the case of Commissioner of Central Excise and S.T. vs. Ultratech Cement Ltd. clarified that post-amendment, services used for transportation beyond the place of removal are not eligible for Cenvat credit. The Tribunal, however, noted that supplies made on an FOR basis, where the seller retains ownership and risk until delivery, could still be eligible for credit, as clarified in subsequent CBEC Circulars. 3. Impact of Supreme Court Judgments and CBEC Circulars: The Tribunal heavily relied on the Supreme Court's judgment in Ultratech Cement Ltd., which held that Cenvat credit on GTA services for transportation from the place of removal to the buyer's premises is not admissible post the 2008 amendment. However, the Tribunal also considered the CBEC Circular No.1065/4/2018-CX, which provided exceptions for FOR destination sales. The Circular clarified that in cases where the contract is on an FOR basis, and the seller retains ownership and risk until delivery, Cenvat credit on GTA services is admissible. This interpretation aligns with the Tribunal's findings in similar cases like M/s CEAT Ltd. and M/s Hindustan Zinc Ltd., where credit was allowed under similar circumstances. Conclusion: The Tribunal concluded that the supplies in the present case were made on an FOR basis, which entitles the appellant to avail Cenvat credit on the GTA services for outward freight. The appeal was allowed, setting aside the impugned order, and confirming the eligibility of Cenvat credit in such cases. This decision underscores the importance of contract terms and ownership risk in determining the place of removal and eligibility for Cenvat credit.
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