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2019 (9) TMI 466 - AT - Central ExciseCENVAT Credit - input services - freight charges for outward transportation of goods - HELD THAT - It is clear that the sale is on F.O.R. basis. The documents show that the sale is on F.O.B. destination/free house delivery. The appellant was under an obligation to deliver the goods at the buyer s premises. They have also included the freight charges in the assessable value while discharging the excise duty. This issue, as to how to determine the place of removal, when the sale is on F.O.R. basis, as has been dealt in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. 2015 (4) TMI 857 - SUPREME COURT . The department has also clarified vide its Circular dated 08.06.2018 that when the sale is on F.O.R. basis, the freight charges ought to be included in the assessable value and the place of removal would be buyer s premises. The documents in the present case as well as the facts reveal that the place of removal is the buyer s premises - the disallowance of credit is unjustified. Appeal allowed - decided in favor of appellant.
Issues:
Whether the appellant is eligible for the credit of service tax paid on freight charges for outward transportation of goods. Analysis: The appellants, engaged in manufacturing motor vehicle parts and registered with the Central Excise department, faced a show-cause notice alleging ineligible credit on outward transportation of goods for specific periods. The original authority confirmed the demand, interest, and penalties, which was upheld by the Commissioner (Appeals), leading to the appeals. The appellant argued that goods were sold on F.O.R. basis, with an obligation to deliver at the buyer's premises, and freight charges were included in the assessable value for excise duty. Referring to Circular No.1065/4/2018-Cx. and a Supreme Court decision, the appellant contended that the place of removal should be the buyer's premises, making them eligible for credit on service tax paid on freight charges. The learned Authorized Representative for the Revenue supported the impugned order, leading to a hearing where both sides presented their arguments. The crucial issue revolved around determining the eligibility of the appellant for the credit of service tax paid on freight charges for outward transportation of goods. The records indicated sales on F.O.R. basis, with documents showing F.O.B. destination/free house delivery, and an obligation to deliver goods at the buyer's premises. Considering the Circular and relevant case law, including the decision in M/s. Genau Extrusions Ltd., the place of removal was deemed to be the buyer's premises. Consequently, the disallowance of credit was deemed unjustified, leading to the setting aside of the impugned orders in both appeals and granting of consequential reliefs, if any. In conclusion, the judgment by the Appellate Tribunal CESTAT CHENNAI, delivered by Hon’ble Smt. Sulekha Beevi C.S., Member (Judicial), resolved the issue of the appellant's eligibility for credit on service tax paid on freight charges for outward transportation of goods by emphasizing the determination of the place of removal based on sales terms and relevant legal precedents.
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