2016 (7) TMI 150 - AT - Central Excise

Cenvat Credit of service tax paid on GTA services - outward transportation of goods - Held that - the place of removal is to be considered as the buyer s premises and hence this gets covered within the definition of input service under Rule 2 (l) since the outward transportation service is used by the manufacturer for clearance of the products up to the place of removal. Consequently the Cenvat credit will be allowable as input service. - Decision in the case of CCE Kolkata IV vs. Vesuvious India Ltd. 2013 (12) TMI 1025 - CALCUTTA HIGH COURT distinguished - Decided in favor of assessee.

Summary

Issues Involved:
1. Denial of Cenvat credit on service tax paid for outward transportation of goods.
2. Definition and interpretation of "place of removal" under the Cenvat Credit Rules, 2004.
3. Applicability of CBEC Circulars and relevant case laws.

Detailed Analysis:

1. Denial of Cenvat Credit on Service Tax Paid for Outward Transportation of Goods:
The appeal challenges the order by Commissioner (Appeals), Raipur, which upheld the denial of Cenvat credit amounting to ?85,324/- on service tax paid for outward transportation of goods. The Original Authority had confirmed this denial in its order dated 28/05/2014. The appellant, a manufacturer of excisable goods, argued that the service tax paid on outward transportation should be considered as input service, thus eligible for Cenvat credit.

2. Definition and Interpretation of "Place of Removal" under the Cenvat Credit Rules, 2004:
The core issue revolves around whether the service tax paid on outward transportation up to the buyer’s premises qualifies as input service under Rule 2(l) of the Cenvat Credit Rules, 2004. The authorities below held that Cenvat credit on outward transportation is permissible only up to the factory gate, which they considered the place of removal. The appellant, however, cited the CBEC Circular No. 97/8/2007-S.T. dated 23/08/2007, which allows credit if the sale occurs at the buyer’s premises, provided certain conditions are met, such as the ownership of goods remaining with the seller until delivery, the seller bearing transit risks, and freight charges being part of the goods' price.

3. Applicability of CBEC Circulars and Relevant Case Laws:
The appellant relied on the CBEC Circular dated 23/08/2007 and case laws such as Ambuja Cements Ltd. vs. Union of India and ABB Ltd. vs. CCE & ST, Bangalore to support their claim. The Revenue, however, referenced a subsequent CBEC Circular No. 988/12/2014-CX dated 20/10/2014, which emphasized that the place of removal should be determined based on the Sale of Goods Act, 1930, and not merely on who bears the transport costs or risks. The Revenue also cited the decision in CCE, Kolkata - VI vs. Vesuvious India Ltd., which held that Cenvat credit for outward transportation is inadmissible if the sale occurs at the factory gate.

Upon examining the purchase order and the conditions stipulated by the CBEC Circular, the Tribunal found that the appellant met the criteria for considering the buyer's premises as the place of removal. Consequently, the service tax paid on outward transportation up to the buyer’s premises qualified as input service, making the appellant eligible for Cenvat credit.

The Tribunal noted that earlier case laws cited by the appellant pertained to periods before the amendment of the definition of input service on 01/04/2008 and thus were not directly applicable. The Tribunal also distinguished the present case from the Vesuvious India Ltd. decision, as the latter dealt with a period prior to the amendment.

Conclusion:
The Tribunal allowed the appeal, granting the appellant the Cenvat credit on the service tax paid for outward transportation up to the buyer’s premises, with consequential relief. The judgment emphasized the importance of determining the place of removal based on the specific terms of the sale contract and relevant statutory provisions.