2019 (7) TMI 731 - AT - Central Excise

CENVAT Credit - input services - Outward Transportation of Goods up to the buyer s premises - the sale is on FOR basis - place of removal - HELD THAT - It is not necessary that there should be a separate contract for supply of goods. The parties can agree to the terms and conditions of the sale in the purchase orders itself. This becomes a concluded contract when the offer is accepted by the supplier/buyer - Therefore, when the purchase orders itself show that the condition for sale is FOR basis, the observations made by the authorities below that the appellant has failed to produce any evidence/contract establishing that they have borne the freight charges, insurance, etc., is without any factual basis and unacceptable. In the present case, letters/certificates have been obtained by the appellant from the purchasers of the goods showing that the purchasers have not paid any freight charges separately. This strongly implies that the appellants have borne the freight charges and have included it in the assessable value on which Excise Duty has been discharged by them. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for credit of Service Tax on Outward Transportation of Goods up to buyer's premises.

Analysis:
The case involved the appellants, engaged in manufacturing Fuel Injection Pump/Valve Assembly, who availed input service tax credit on Outward Transportation of Goods up to the buyer's premises. The Department contended that credit beyond the factory gate was not eligible. A demand was raised, confirmed by the Original Authority and Commissioner (Appeals), leading to the appeal.

The appellant argued that they cleared goods on FOR basis, with freight charges included in the assessable value, supported by purchase orders and buyer certificates. They cited relevant case laws and circulars to support their claim. The respondent, however, supported the lower authorities' findings, emphasizing insufficient evidence from the appellants.

Upon review, the Tribunal found the sale was on FOR basis based on purchase orders, concluding that the appellant had borne freight charges. Citing case laws and certificates from buyers, the Tribunal held that the place of removal was the buyer's premises, making the appellant eligible for credit. The decision was supported by previous Tribunal rulings and the Apex Court's observations.

Ultimately, the Tribunal deemed the disallowance of credit unjustified, setting aside the impugned order and allowing the appeal with consequential reliefs as per law. The judgment highlighted the importance of contractual terms in purchase orders and the significance of evidence in establishing eligibility for tax credits on transportation services.