2024 (11) TMI 877 - AT - Central Excise

Disallowance of CENVAT Credit - service tax paid on the goods transport agency (GTA) services received by the appellant to transport the cement from its factory to the buyer s premises sold on FOR (free on road) destination basis - place of removal - recovery alongwith interest and penalties - HELD THAT - Since there were conflicting views, the issue was referred to the Larger Bench in Ramco Cement versus CCE 2023 (12) TMI 1332 - CESTAT CHENNAI-LB . The Larger Bench decided that where the goods are sold on FOR destination basis and the ownership of the goods gets transferred at the customer s premises, the place of removal shifts to the buyer s premises. In this case, there is no dispute that the goods were sold on FOR destination basis and so the place of removal gets shifted at the buyer s premises. Therefore, following the decision of the Larger Bench, it is held that the place of removal shifts to the buyer s premises and the appellant is entitled to CENVAT credit of the service tax paid on GTA services availed to transport the goods to the buyer s premises. The impugned order is set aside - appeal allowed.

Summary

Issues:
- Disallowance of CENVAT credit on service tax paid for GTA services
- Interpretation of "place of removal" in the context of CENVAT credit eligibility

Analysis:
The appellant, a manufacturer of cement and clinker, appealed against the dismissal of their appeal by the Commissioner (Appeals) regarding the disallowance of CENVAT credit on service tax paid for goods transport agency (GTA) services. The Commissioner upheld the Order in Original disallowing the credit and ordering its recovery along with interest and penalties. The appellant contended that in sales made on FOR destination basis, the place of removal shifts to the buyer's premises, making GTA services eligible for CENVAT credit.

The CENVAT Credit Rules, 2004 allow manufacturers to take credit of excise duty paid on inputs and service tax paid on input services. The definition of "input service" includes services used in relation to the manufacture of final products up to the place of removal. The term "place of removal" is crucial in determining the eligibility of CENVAT credit on GTA services used to transport goods sold on FOR destination basis. The appellant argued that if the place of removal shifts to the buyer's premises, GTA services become eligible for credit.

The Revenue contended that the place of removal remains the seller's factory even in sales made on FOR destination basis, thus denying CENVAT credit on GTA services. The issue was referred to a Larger Bench in a previous case, where it was decided that in sales on FOR destination basis with ownership transfer at the buyer's premises, the place of removal shifts to the buyer's premises. In alignment with this decision, the Tribunal held that in the appellant's case, where goods were sold on FOR destination basis, the place of removal indeed shifted to the buyer's premises. Consequently, the Tribunal set aside the impugned order and allowed the appeal, granting the appellant CENVAT credit on the GTA services used to transport goods to the buyer's premises.

In conclusion, the judgment clarified the interpretation of "place of removal" in the context of CENVAT credit eligibility for GTA services in sales made on FOR destination basis, providing relief to the appellant and allowing them to avail the credit.