2019 (2) TMI 1488 - AT - Central Excise

CENVAT Credit - input services - services of Goods Transport Agency for transportation of cement - place of removal - demand was confirmed by the adjudicating authorities holding that the credit on GTA service is available as input service only up to place of removal after 01.04.2008 in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 - issue under litigation - extended period of limitation - Held that - The Appellants are clearing their goods on MRP basis in case of clearance from their depot/ stockists or to their customers and in case of sale to institutional consumers the goods are being cleared by them by applying valuation in terms of Section 4. The Appellant have annexed copies of excise invoice cum gate pass which shows that the prices are inclusive of freight and insurance and nothing extra has been charged. The goods are being cleared on FOR basis and all liabilities in respect of transportation of goods or damage to goods were on account of Appellants. They were liable for safe delivery of goods upto their customers doorstep. In such case when the sale of the goods is completed at the doorstep of the Customer or depot/ stockist as the case may be the point of sale shall be such doorstep. The Chartered/ Cost Accountant has certified that the goods were sold on FOR basis by the Appellant and the freight/ damages in transit was responsibility of Appellant till the goods reached the doorstep of the Customers. Also we find that the consignment notes were raised upon the Appellant and they did not charge any amount except price of the goods from the customers - as per Circular No. 1065/4/2018 CX dt. 08.06.2018, it is found that that as the ownership of the goods remained with the Appellants till the goods reached to the customer s doorstep and the freight charges as well as damage to the goods till destination were borne by the Appellants, hence they are eligible for the credit of service tax paid by them on outward freight. As regard the issue raised by the appellant that the excise duty paid on the element of freight being more than the element of cenvat credit on the outward GTA, therefore, there should not be any demand. We find force in the argument of the appellant however, since we are deciding the issue on merit, the admissibility of the Cenvat Credit on outward GTA on the basis of provision under Cenvat Credit Rules itself, we need not to deal this aspect hence, the issue related to this fact left open. Time Limitation - Held that - The issue was not free from doubt and right from introduction of Cenvat Scheme under Cenvat Credit Rules, the outward GTA was the matter under litigation and for that reason the Government has to come out with clarification thereafter the matter was subject to various litigation before Tribunal, Hon ble High Courts and Hon ble Supreme Court, therefore no malafide intention can be attributed to the appellant, therefore, wherever the demand is for extended period, the same will also not be sustainable on the ground of time bar also. The Appellants are eligible for the credit of service tax paid on outward freight - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Eligibility of Cenvat Credit on Service Tax paid on Outward Transportation (GTA services).
2. Determination of "Place of Removal" for the purpose of availing Cenvat Credit.
3. Applicability of Beneficial Circulars Retrospectively.
4. Limitation and Suppression of Facts.

Detailed Analysis:

1. Eligibility of Cenvat Credit on Service Tax paid on Outward Transportation (GTA services):
The appellant, engaged in the manufacture of cement, availed services of Goods Transport Agency (GTA) for transportation of cement. The dispute arose regarding the eligibility of Cenvat Credit on service tax paid on outward transportation of goods. The adjudicating authorities denied the credit, stating that it is only available up to the "place of removal" as per Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant argued that the goods were sold on a FOR (Free on Rail/Road) basis, meaning all expenses up to delivery, including transportation and damages, were borne by them. The price charged to the customer included freight and insurance charges, making them eligible for the credit. The Tribunal found that since the ownership and risk of goods remained with the appellant until delivery, the place of removal extended to the buyer's doorstep, making the appellant eligible for the credit.

2. Determination of "Place of Removal" for the purpose of availing Cenvat Credit:
The determination of the "place of removal" was crucial. The appellant cited various circulars and judgments to argue that the place of removal should be considered the buyer's premises when goods are sold on a FOR basis. The Tribunal referred to Circular No. 1065/4/2018-CX, which clarifies that the place of removal is the point of sale, and in cases where goods are sold on a FOR basis, the place of removal extends to the buyer's premises. The Tribunal also cited the Supreme Court's judgment in the case of CCE vs. Roofit Industries Ltd., which held that when goods are sold on a FOR basis, the freight paid on outward transportation qualifies as "input service."

3. Applicability of Beneficial Circulars Retrospectively:
The appellant argued that even though certain circulars were withdrawn in 2018, the benefit of those circulars should be available for the relevant period of this case. The Tribunal agreed, stating that beneficial circulars cannot be withdrawn retrospectively. The law on this issue has been settled by the Supreme Court, and the benefit of the circulars in force at the relevant time should be available to the appellant.

4. Limitation and Suppression of Facts:
The appellant contended that the demand was time-barred as there was no suppression of facts. The issue of Cenvat Credit on outward GTA was under litigation at various judicial forums, making it a matter of interpretation rather than suppression. The Tribunal found that the issue was indeed contentious and subject to various clarifications and litigations, thereby ruling out any malafide intention on the appellant's part. Consequently, the extended period for demand was not sustainable on the grounds of time bar.

Conclusion:
The Tribunal concluded that the appellants are eligible for the credit of service tax paid on outward freight, as the ownership and risk of goods remained with them until delivery to the buyer's doorstep. The impugned orders were set aside, and the appeals were allowed with consequential reliefs. The Tribunal also noted that the beneficial circulars in force at the relevant time should be applied retrospectively, and the demands for the extended period were not sustainable due to the absence of suppression of facts.

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