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2015 (7) TMI 1001 - HC - Central ExciseDenial of CENVAT Credit - Input service - Place of removal - Whether the Tribunal was correct in disallowing CENVAT credit of service tax paid on the GTA service which is availed by the manufacturer on outward transport from the place of removal for the period after 31.03.2008 subsequent to the amendment of definition of input service under Rule 2(l)(ii) of CENVAT Credit Rules - Held that - As long as the sale of the goods is finalized at the destination, which is at the door step of the buyer, the change in definition of input service which came into effect from 01.04.2008 would not make any difference. A perusal of invoices makes it clear that the goods were to be delivered and sale completed at the address of the buyer and no additional charge was levied by the assessee for such delivery. From these facts it is clear that the sale was completed only when the goods were received by the buyer. Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case assessee would be entitled to the benefit of CENVAT credit on Service Tax paid on outward transportation of goods by the assessee even after 01.04.2008. The appellant-assessee would thus be entitled to such benefit for the period 01.04.2008 to 31.07.2008 which has been denied to it by the authorities below. - Decided in favour of assessee.
Issues:
Interpretation of "place of removal" for input service under CENVAT Credit Rules, 2004. Analysis: The appellant, a cement manufacturer, claimed CENVAT credit on input service for transporting cement sold to buyers. The dispute arose regarding the period from August 2006 to July 2008, specifically after the amendment to the definition of "input service" effective from 1.4.2008. The Tribunal granted credit up to 31.03.2008 but denied it from 01.04.2008 to 31.07.2008. The main issue was whether the Tribunal correctly disallowed CENVAT credit post the 2008 amendment. The definition of "input service" pre- and post-1.4.2008 was crucial. The amendment changed "upto the place of removal" to "from the place of removal." Additionally, a new definition of "place of removal" was inserted in 2014. A circular clarified that the place of removal should be determined based on the Sale of Goods Act, not on transport payment or insurance. The key consideration was where the sale was finalized, not who bore the transport risk or cost. The appellant contended that the sale was completed only upon delivery to the buyer, as indicated in the invoices with "FOR destination" terms. The assessing officer, however, focused on ownership transfer at the factory gate, denying credit for outward freight. The High Court emphasized that if the sale was concluded at the buyer's destination, the 2008 amendment did not alter credit eligibility. The circular further supported this interpretation, emphasizing the importance of the buyer's receipt location in finalizing the sale. The Court rejected the Commissioner's contention against the appellant's claim, emphasizing that the circular favored the appellant's position. It found that the title passed to the buyer only upon delivery at the buyer's address, not before. The Tribunal's decision solely relied on the post-2008 amendment without considering the sale completion location. Consequently, the Court allowed the appeal, granting the appellant CENVAT credit for the disputed period post-1.4.2008. The Tribunal's decision to disallow credit after 31.03.2008 was overturned in favor of the appellant.
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