2012 (6) TMI 460 - AT - Central Excise

Cenvat credit - outward transportation of goods up to the place of their buyers - supplies made by them to their buyers of FOR destination basis Held that - Assessee is eligible for cenvat credit for the period prior to 1.4.2008. Appeal is allowed

Summary

Issues:
Eligibility for cenvat credit of service tax paid on outward transportation of goods.

Analysis:
The only issue in this case pertains to the eligibility of the respondent for cenvat credit of service tax paid on outward transportation of goods from the factory to the buyer's premises during the period from January 2007 to September 2007. The respondent claimed eligibility based on their sales being on FOR destination basis. However, the department disallowed the credit, leading to an order confirming the demand for cenvat credit, interest, and penalty. On appeal, the Commissioner of Central Excise (Appeals) set aside the order-in-original, citing that the sales were indeed on FOR destination basis, meeting all conditions specified in a Board's Circular. The Revenue then filed an appeal against this decision.

During the hearing, the learned DR for the Revenue contested the order, while the respondent's counsel argued that the sales being on FOR destination basis made them eligible for cenvat credit, referencing relevant court judgments. The Tribunal considered the submissions and examined the issue in light of previous High Court judgments. It noted that prior to April 1, 2008, GTA services for goods transportation from the factory were considered 'input service' if the sale occurred at the customer's premises on FOR destination basis. The Commissioner (Appeals) found the respondent's sales met these criteria, with ownership and risk of goods during transit resting with the respondent, making freight an integral part of the goods' value.

The Tribunal emphasized that the Revenue failed to challenge the Commissioner (Appeals)'s findings on the nature of the respondent's transactions. It highlighted High Court judgments supporting the eligibility of cenvat credit in such cases. The Tribunal dismissed the Revenue's appeal, citing the satisfaction of conditions for considering the transactions as FOR destination basis, making the customer's premises the place of removal and thereby covering GTA services under 'input service'. The Tribunal found no merit in the Revenue's appeal and upheld the decision in favor of the respondent, based on established legal precedents and factual analysis.