2018 (8) TMI 1332 - AT - Central Excise

CENVAT Credit - GTA Services - recipient of service - place of removal - Held that - It is an admitted fact on record that the goods were removed from the factory of the respondent for onward sale to its buyers. Thus, the place of removal should be considered at the factory gate and not the premises of the buyer - the respondent should not be eligible for the CENVAT benefit in respect of Service Tax paid by it under Reverse Charge Mechanism, as recipient of GTA service, for transportation of goods, for delivery at the buyer s premises - appeal allowed - decided in favor of Revenue.

Summary

Issues:
- Eligibility of CENVAT credit on transportation of goods for delivery at the buyer's premises.

Analysis:
The appeal was filed by Revenue against the order passed by the Commissioner of Central Tax (Appeals-I), Pune, regarding the eligibility of CENVAT credit on transportation of goods for delivery at the buyer's premises. The respondent, a manufacturer of excisable goods, availed CENVAT credit of Service Tax paid on GTA service under reverse charge mechanism during the disputed period. The Department disputed this credit, arguing that transportation of goods for delivery at the buyer's premises should not be considered as an input service for CENVAT credit as per Rule 2(l) of the CENVAT Credit Rules, 2004. The Department contended that since the place of removal for the respondent was the factory gate, expenses incurred for transportation beyond that point should not be eligible for credit.

The Tribunal analyzed the issue in light of the judgment of the Hon'ble Supreme Court in the case of Commissioner of Central Excise and Service Tax Vs. Ultratech Cement Ltd. The Supreme Court ruled that services used for transportation of goods "up to the place of removal" should be considered as input services. In this case, it was established that the goods were removed from the factory for sale to buyers, making the factory gate the place of removal. Therefore, the Tribunal held that the respondent should not be eligible for CENVAT benefit on Service Tax paid under Reverse Charge Mechanism for transportation of goods to the buyer's premises.

The Tribunal acknowledged the contentious nature of the issue but emphasized that penalty imposition was not warranted, considering the resolution based on the Supreme Court's judgment in the Ultratech Cement Ltd. case. Consequently, the Tribunal allowed Revenue's appeal to the extent of denying CENVAT benefit on the GTA service availed by the respondent, in line with the legal interpretation provided by the Supreme Court.

This detailed analysis of the judgment highlights the key legal arguments, the interpretation of relevant rules, and the application of precedent set by the Supreme Court in resolving the issue of CENVAT credit eligibility on transportation services for delivery at the buyer's premises.