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2019 (1) TMI 170 - AT - Central ExciseCENVAT Credit - outward freight services - Department entertained a view that in view of the Circular dated 23.8.2007, since the outward freight charges do not form an integral part of the price of the goods, the appellant is not eligible to avail and utilize the credit of service tax paid on freight. Held that - The appellants as per the contracts entered into with their customers, they are supplying the goods on FOR basis and are availing the credit of the service tax paid on the GTA services to the extent that such services are used for transportation of goods to the customer premises - vide various circulars issued in 2007, 2014, 2015 by the Board, the Board has clarified that the place where the sale takes place is the place of removal because the property in goods passes at the place of the buyer. There were decisions which have specifically held that the place of removal needs to be ascertained in terms of provisions of Central Excise Act, 1944 read with provisions of Sale of Goods Act, 1930 and the terms of contract between the parties - thus, the appellant is not entitled to CENVAT credit on GTA services. Penalty - Held that - Since the issue relates to interpretation of the definition of input service , therefore, suppression cannot be alleged against the appellant and penalty cannot be imposed. Appeal dismissed - decided against appellant.
Issues:
Appeal against common impugned order dated 20.11.2017 by Commissioner (A) - CENVAT credit denial on freight charges - Interpretation of 'place of removal' for availing credit on GTA services. Analysis: Issue 1: CENVAT Credit Denial The appellants challenged the denial of CENVAT credit on freight charges by the department. The appellant contended that the impugned order did not consider relevant facts and laws, emphasizing that the CENVAT Credit Rules, 2004 do not mandate including expenses in the assessable value for availing credit. They relied on judicial precedents like ABB Ltd. case upheld by the Karnataka High Court and the Supreme Court. The appellant argued that Circular No.97/8/2007-ST and Circular No.988/12/2014-CX supported their position on credit eligibility. On the other hand, the department argued that the apex court's decision in Ultratech Cements Ltd. case barred CENVAT credit on GTA services beyond the place of removal. The Circular dated 8.6.2018 by CBEC was deemed insufficient to override the court's decision. The tribunal analyzed the contentions and held that the appellant could not avail CENVAT credit on GTA services based on the Ultratech Cements Ltd. case, despite subsequent clarifications. Issue 2: Interpretation of 'Place of Removal' The tribunal delved into the interpretation of 'place of removal' for determining credit eligibility on GTA services. It referred to Circulars issued by the Board in 2007, 2014, and 2015, emphasizing that the place of sale equates to the place of removal. The tribunal noted that the determination of 'place of removal' is crucial and must align with the Central Excise Act, 1944, Sale of Goods Act, 1930, and contractual terms. Citing the Ultratech Cements Ltd. case, the tribunal highlighted that CENVAT credit is limited to the place of removal. The tribunal dismissed the penalties imposed due to the interpretation issue and the recent apex court decision, thereby confirming the demands while setting aside the penalties in both cases. In conclusion, the tribunal upheld the denial of CENVAT credit on freight charges and affirmed the interpretation of 'place of removal' for availing credit on GTA services based on the Ultratech Cements Ltd. case, disregarding subsequent circulars.
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