2010 (1) TMI 300 - AT - Service Tax

Cenvat Credit- whether the benefit of Cenvat credit of the Service tax paid on GTA service availed by the appellant for outward transportation of their final products from the factory to the buyer s premises is admissible to them. Held that- The Revenue has not been able to establish that the actual transaction was contrary to the above conditions of the contract. In the circumstances, it can only be held that the appellant satisfied all the conditions stipulated in the Board s circular and, therefore, they are entitled to Cenvat credit of the Service tax paid on GTA service availed by them for outward transportation of their goods to their buyer s premises. The decision to the contra is to be set aside. Accordingly, the impugned order is set aside and this appeal is allowed.

Summary

Issues:
Admissibility of Cenvat credit on GTA service for outward transportation of final products.

Analysis:
The primary issue in this case was whether the appellant was entitled to the benefit of Cenvat credit on the Service tax paid for GTA service used in transporting their final products to the buyer's premises. The Hon'ble High Court's decision in Ambuja Cements Ltd. v. UOI established three conditions for claiming such benefits. Firstly, the ownership of the goods must remain with the seller until delivery to the buyer. Secondly, the seller should bear responsibility for damages during transit. Lastly, freight charges should be included in the price of the goods. The appellant in this case fulfilled all these conditions as per the terms of the purchase order. The Revenue failed to prove any deviation from the contractual conditions, leading to the conclusion that the appellant met all requirements for claiming the Cenvat credit. Consequently, the impugned order denying the benefit was set aside, and the appeal was allowed.

This judgment highlights the importance of contractual terms and conditions in determining eligibility for Cenvat credit on GTA services. It emphasizes the need for strict adherence to the conditions laid down by the Board and upheld by the High Court. The case serves as a precedent for manufacturers seeking to avail of such benefits, emphasizing the significance of fulfilling all specified conditions to claim the Cenvat credit successfully. The decision underscores the need for clarity and consistency in contractual agreements to support claims for tax benefits related to transportation services.