2016 (7) TMI 294 - AT - Central Excise

Cenvat Credit - input services - upto the place of removal - service tax paid on transportation and freight charges in respect of transportation of finished goods from the factory up to the customers premises as well as to the port in case of export of final products. - The contention of the appellant is that if opportunity is given to him he can produce the documents which will help the learned Commissioner (Appeals) to arrive at the correct finding. Held that - The order set aside - matter remanded back to Commissioner (Appeals) with a direction to decide the appeal afresh after considering the evidence furnished by the appellant company. It is made clear that before deciding the case learned Commissioner (Appeals) is required to afford an opportunity of hearing to the appellant who will be free to submit all the documentary evidence in their possession in support of their case. - Decided in favor of assessee.

Issues Involved:
1. Denial of CENVAT credit on service tax paid for Goods Transport Agency (GTA) services.
2. Determination of the "place of removal" for the purpose of availing CENVAT credit.
3. Adequacy of documentary evidence to support the claim for CENVAT credit.
4. Application of Board’s Circular No. 97/8/2007-ST dated 23.08.2007.
5. Remand for fresh consideration and submission of additional evidence.

Issue-Wise Detailed Analysis:

1. Denial of CENVAT credit on service tax paid for Goods Transport Agency (GTA) services:
The primary issue in this case revolves around the denial of CENVAT credit for service tax paid on GTA services. The appellants, manufacturers of graphite products, claimed CENVAT credit for service tax paid on transportation and freight charges for goods transported from the factory to customers' premises and ports for export. The adjudicating authority and the Commissioner (Appeals) both disallowed this credit, leading to the present appeal.

2. Determination of the "place of removal" for the purpose of availing CENVAT credit:
The core of the dispute is the determination of the "place of removal." The appellant argued that based on purchase orders, invoices, and agreements, the place of removal should be the buyer's premises or the port of export, as they bore the risk and cost of transport up to these locations. The Commissioner (Appeals) held that the factory is the only place of removal, rejecting the appellant’s claim. The Commissioner cited Board’s Circular No. 97/8/2007-ST, stating that the place of removal must be determined case-by-case with relevant documents, which the appellant failed to provide.

3. Adequacy of documentary evidence to support the claim for CENVAT credit:
The Commissioner (Appeals) emphasized that the appellant did not produce adequate documentary evidence, such as contracts or agreements, to prove that the seller bore the risk and cost beyond the factory gate. The appellant presented a Chartered Accountant’s certificate, but it was not considered sufficient as it did not cover the relevant period comprehensively. The Commissioner noted that the appellant did not include freight and insurance costs in the assessable value for Central Excise Duty, undermining their claim.

4. Application of Board’s Circular No. 97/8/2007-ST dated 23.08.2007:
The Commissioner (Appeals) relied heavily on Board’s Circular No. 97/8/2007-ST, which clarifies that CENVAT credit on service tax for transportation is admissible only up to the place of removal. The circular specifies that freight charges must be an integral part of the price of goods, and the transfer of property must occur at the place of delivery. The Commissioner found that the appellant did not meet these conditions, as the terms of sale indicated the factory gate as the place of removal.

5. Remand for fresh consideration and submission of additional evidence:
In light of the appellant’s contention that they could provide necessary documents if given an opportunity, and the respondent’s agreement to a remand, the Tribunal decided to set aside the impugned order. The case was remanded back to the Commissioner (Appeals) for a de novo decision, directing the appellant to submit all relevant documentary evidence. The Commissioner (Appeals) is instructed to afford a hearing to the appellant and dispose of the appeal within four months from the receipt of the order.

Conclusion:
The Tribunal set aside the impugned order and remanded the case to the Commissioner (Appeals) for fresh consideration, emphasizing the need for the appellant to produce adequate documentary evidence to support their claim for CENVAT credit on GTA services. The remand aims to ensure a thorough examination of the evidence in line with the Board’s Circular and relevant legal provisions.

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