2025 (3) TMI 193 - AT - Central Excise

CENVAT Credit - input service of transportation of goods upto the place of removal - extended period of limitation - HELD THAT - The issue to determine is the admissibility of Cenvat credit in respect of outward transportation whether the supply of goods on FOR basis or at the factory gate. If Board has clarified through the circular on FOR basis the credit should have been admissible in the present case it is found from the purchase order reproduced bellow that the supply of total cost basis at the premises of the appellant and in case of any defect entire sale was to be rejected. From the perusal of the above purchase order the condition it is found that the entire supply is made on total cost basis and could have been rejected by the buyer for any defects noticed subsequent to delivery. The above condition of purchase order is enough to hold that transit risk was with the appellant and supply was made on FOR basis. That being so on the basis of Board Circular the credit could not have been denied. Extended period of limitation - HELD THAT - The Board has specifically directed against invocation of extended period of limitation as the issue involved is interpretational in nature. The demand made by invoking extended period of limitation goes contrary to the spirit of the circular. Thus there are no merits in the same and also the penalties imposed under Rule 15 read with section 11AC of the Central Excise Act 1944. There are no merits in the impugned order and the same is set aside - appeal allowed.

Summary

The appeal before the Appellate Tribunal concerned the admissibility of Cenvat credit on transportation charges used in outward transportation. The main issue was the determination of the "place of removal" in the context of claiming credit for transportation services. The appellant argued that the place of removal was the buyer's premises, while the department contended it was the appellant's factory premises.The Tribunal considered the appellant's reliance on Supreme Court decisions in similar cases where the Court extended benefits based on ownership and risk in transit until goods were accepted by the buyer. However, the Tribunal found that the purchase orders submitted as evidence did not support the appellant's claim of ownership and risk in transit remaining with them until delivery to the buyer. The Tribunal noted that the appellant failed to provide substantial evidence to support their position, and a certificate from a Chartered Accountant was deemed insufficient.The Tribunal referenced a Board Circular that clarified the admissibility of Cenvat credit on transportation services up to the place of removal. The Circular highlighted a Supreme Court judgment that restricted the definition of "input service" to only include services up to the place of removal. Based on this Circular and the terms of the purchase orders, the Tribunal concluded that the transit risk was with the appellant and the supply was made on a "FOR" (Free on Rail) basis, making the credit admissible.Moreover, the Tribunal emphasized that the Circular discouraged the invocation of extended periods of limitation for cases involving interpretational issues. Therefore, the Tribunal set aside the impugned order that disallowed the Cenvat credit and imposed penalties under Rule 15 of the Cenvat Credit Rules.In conclusion, the Tribunal allowed the appeal, finding in favor of the appellant based on the interpretation of the place of removal and the application of the Board Circular in determining the admissibility of Cenvat credit on outward transportation services.