2016 (12) TMI 21 - AT - Central Excise

Demand - Cenvat credit - GTA services - whether the place of removal is the factory of the appellant or the customer s premises - Held that - the appellants have submitted categorical supporting evidences to the effect that place of removal is the customer s premises only. As already noted they heavily relied on the terms of purchase orders, freight payment by the appellants, risk and insurance, inclusion of freight in the value for excise duty in support of their case - Since, large number of purchase orders covering the period of demand are to be examined for factual verification, we find it a fit case for remanding the matter back to the Original Authority for re-verification of the facts and to record his finding thereafter - Appeal allowed by way of remand.

Summary

Issues:
Eligibility of appellant for Cenvat credit of service tax paid for GTA services for outward movement of cement up to the premises of the buyers.

Analysis:
The dispute revolves around whether the "place of removal" is the factory of the appellant or the customer's premises. The appellants argue that the sale of cement is on FOR basis as per purchase orders from customers and dealership agreements. The appellant's invoices indicate Free On Board (FOB) due to software limitations, but the common understanding is FOB stands for delivery at the destination. The commercial invoices show segregation of value for transportation purposes, with no extra amount charged to customers for transportation. The transport is arranged and paid for by the appellant, including service tax. In case of transit loss, credit notes are issued to customers. The Original Authority disallowed the service tax credit based on the view that the place of removal is the factory gate, not the customer's premises.

The Original Authority relied on the dealer's agreement mentioning ex-works/ex-dump/FOR basis transactions and concluded that the place of removal was the factory gate. The Original Authority held that ownership during transit till delivery was not established, and the date of delivery at the factory was considered relevant for pricing. The sale through a dealer was also examined, with the conclusion that the sale could not be at the dealer's destination. The Original Authority found the appellant's evidence insufficient to treat outward transportation as an input service.

The appellants provided evidence supporting the customer's premises as the place of removal, including purchase orders, freight payment, risk and insurance, and inclusion of freight in excise duty value. The Original Authority did not adequately examine all evidence submitted by the appellant. The Tribunal noted that the dealer's agreement covered various transaction modes but did not imply all clearances were on ex-works basis. The matter was remanded back to the Original Authority for factual verification and recording findings, with all issues kept open for further examination. The appellants were granted the opportunity to present their case before a decision is made.

In conclusion, the appeal was allowed by way of remand, setting aside the impugned order and providing the appellants with the chance to present additional evidence and arguments before a final decision is reached.