2017 (1) TMI 1073 - AT - Central Excise

CENVAT credit - outward freight - denial on the ground that the appellant has availed CENVAT credit on GTA services utilized for transportation of their finished goods beyond their factory gate which is their place of clearance during the period of dispute - Held that - the appellant can prove by way of documentary evidences which he claims in his position to prove that the deliveries were on FOR basis, I set aside the impugned order and remand the case back to the original authority to pass a reasoned order after complying with the principles of natural justice - appeal allowed by way of remand.

Summary

Issues involved:
Appeal against denial of CENVAT credit on outward freight and courier service.

Analysis:
The appeal was filed against an order denying CENVAT credit on outward freight but allowing it on courier services. The appellant, engaged in manufacturing excisable goods, faced a show-cause notice proposing to deny CENVAT credit on service tax paid for outward transportation and courier services. The Assistant Commissioner confirmed the demand, leading to an appeal before the Commissioner (A). The Commissioner (A) allowed CENVAT credit on courier services but denied it on outward transportation, citing the appellant's utilization of Goods Transport Agency (GTA) services for transporting finished goods beyond the factory gate. The Commissioner (A) referred to precedents like the decision of the Hon'ble Karnataka High Court and the Hon'ble High Court of Calcutta to support the denial of CENVAT credit on outward transportation.

During the hearing, the appellant's counsel argued that the denial of CENVAT credit on outward freight was legally unsustainable and contrary to precedent decisions. The counsel contended that the appellant had met the conditions specified in CBEC Circular No.97/8/2007-ST, allowing credit for service tax paid on outward transportation. The appellant claimed to have fulfilled conditions such as retaining ownership of goods until delivery to customers, bearing the risk of damage during transit, and including freight charges in the price of goods. The appellant also highlighted that services of a goods transport agency were utilized, with goods supplied on a FOR destination basis. The counsel supported their argument with references to various judgments.

In response, the learned AR reiterated the findings of the impugned order. After considering the submissions, records, cited judgments, and the appellant's claim backed by documentary evidence, the judicial member set aside the impugned order. The case was remanded back to the original authority for a reasoned decision, emphasizing compliance with natural justice principles and providing the appellant with an opportunity to produce documents supporting the FOR sale claim. The operative portion of the order was pronounced in open court on 04/01/2017.