2016 (1) TMI 288 - AT - Central Excise

Cenvat Credit in respect of outward GTA used for removal of intermediate goods either to job worker or to their own other units - place of removal - Held that - In the instant case though the goods were cleared on payment of duty from the factory of the appellant but not sold from the factory. In case of job work goods the sale of the finished goods took place from the appellant factory and in case of removal of goods to their own other unit the sale took place from that other unit. Therefore in the present case transportation (GTA) service is used up to the place of removal and hence qualified as input service. GTA in the present case being used up to the place of removal covered under the definition of input service and hence admissible for Cenvat Credit. - Decided in favor of assessee.

Summary

Issues:
1. Denial of Cenvat Credit for outward GTA used for removal of intermediate goods.
2. Interpretation of place of removal under Section 4(3)(c) of Central Excise Act, 1944.

Analysis:
1. The appellant availed Cenvat Credit for outward GTA used for removal of intermediate goods to job workers or their own units. The Commissioner of Central Excise (Appeals) upheld the denial of credit, stating the goods were cleared on payment of duty, making the factory the place of removal. The appellant argued that sale occurs only after goods return and further manufacturing, not at the factory. The appellant contended that the denial of credit based on the place of removal was incorrect. The Revenue argued that once goods are cleared on duty payment, it constitutes a sale at the factory. The Tribunal noted that the definition of place of removal includes where goods are sold after clearance from the factory. As goods were sold after leaving the factory, the place of actual sale is considered the place of removal, allowing Cenvat Credit for GTA services up to that point.

2. The Tribunal analyzed Section 4(3)(c) of the Central Excise Act, defining place of removal. It includes the factory or premises where goods are sold after clearance. The Tribunal clarified that if goods are sold from a location other than the factory, that location is the place of removal. In this case, goods were not sold at the factory but after being processed or transferred to another unit. Therefore, the place of actual sale, not the factory, is the place of removal. As the GTA services were used up to the place of removal, they qualified as input services eligible for Cenvat Credit. The Tribunal set aside the denial of credit and allowed the appeal, providing consequential relief as per the law.