2017 (7) TMI 638 - AT - Central Excise

CENVAT credit - freight - place of removal - The department was of the view that such Cenvat Credit will not be allowable after the amendment of the definition of input services under Rule 2(l) of the CCR 2004 wherein after the amendment of the definition on 01.04.2008, the credit for the input services will be allowable only upto the place of removal - Held that - The amended definition on input services w.e.f 01.04.2008 allows Cenvat Credit on input services only upto the place of removal - In the present case since the delivery is on FOR basis, the place of removal is to be considered as the customer s premises. Consequently, the service tax paid on freight will be available if freight has been paid upto the customer s premises. Similar issue decided in the case of M/s Madras Cements Ltd Versus The Additional Commissioner of Central Excise, The Commissioner of Central Excise (Appeals-I) 2015 (7) TMI 1001 - KARNATAKA HIGH COURT , where it was held that Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case assessee would be entitled to the benefit of CENVAT credit on Service Tax paid on outward transportation of goods by the assessee even after 01.04.2008. The appellant-assessee would thus be entitled to such benefit for the period 01.04.2008 to 31.07.2008. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility of Cenvat Credit on service tax paid on freight charges from the depot to the customer's premises.

Analysis:
The appellant, a cement manufacturer, claimed Cenvat Credit on service tax paid on freight charges, contending eligibility due to sales being on FOR Destination Basis. The Revenue, however, disallowed the credit post-amendment of the definition of input services, limiting credit to the place of removal. The dispute arose as the department disallowed a significant Cenvat Credit amount. The appellant argued that previous decisions favored their stance, emphasizing that the risk of loss or damage of goods was covered until reaching the customer's premises.

The Tribunal analyzed the issue, noting that the goods were indeed supplied on FOR basis, with delivery up to the customer's premises. Referring to past judgments, the Tribunal highlighted the importance of the place of removal in determining Cenvat Credit eligibility. Notably, the Tribunal cited a specific case where the High Court ruled in favor of the appellant, emphasizing that the sale concluded only upon delivery to the buyer's address, entitling the appellant to the Cenvat Credit on service tax paid on outbound transportation even post-amendment.

Ultimately, the Tribunal, following established legal principles and precedents, set aside the impugned order and allowed the appeal, granting the appellant the benefit of the Cenvat Credit. The decision was based on the clear determination that the sale was completed upon delivery to the buyer's premises, aligning with previous judicial interpretations and supporting the appellant's entitlement to the credit.