2019 (10) TMI 887 - AT - Central Excise

CENVAT Credit - input services - outward transportation of goods - place of removal - period Jan. 16 to Jun. 17 - HELD THAT - The lower authorities have erred in holding that the place of removal is the factory gate - As per the decision of the Hon ble Apex Court in the case of COMMISSIONER CUSTOMS AND CENTRAL EXCISE AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. 2015 (4) TMI 857 - SUPREME COURT when the sale is on F.O.R. basis the freight charges have to be included in the assessable value for discharging of excise duty and if so the place of removal is the buyer s premises. The place of removal in the present case is the buyer s premises and in such circumstances the disallowance of credit on the service tax paid on GTA Services cannot be sustained - the disallowance of credit is unjustified - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellants are eligible for credit of service tax paid on outward transportation of goods.

Analysis:
The appellants, engaged in manufacturing motor vehicle parts, availed credit of service tax paid on GTA outward transportation and forwarding goods to customers' premises. The department contended that credit on outward transportation beyond the place of removal is not eligible. Show-cause notice was issued, and penalties were imposed after due process. The original authority and Commissioner (Appeals) upheld the demand. In appeal, the consultant argued that as the sale was on F.O.R. basis and goods were delivered at the customer's premises, freight charges should be included in the assessable value, citing relevant case laws and Board circular. The consultant emphasized that the place of removal in this case is the buyer's premises, making the credit eligible. The Authorized Representative for the Revenue supported the impugned order.

The Tribunal analyzed the documents provided by the appellants, confirming the sale was on F.O.R. destination. Referring to the Apex Court's decision in M/s. Roofit Industries Ltd., the Tribunal concluded that when the sale is F.O.R. basis, freight charges should be included in the assessable value, making the buyer's premises the place of removal. Citing the Tribunal's decision in M/s. Genau Extrusions Ltd., the Tribunal held that the disallowance of credit on service tax paid on GTA services cannot be sustained in the present case. The Tribunal found the lower authorities erred in considering the factory gate as the place of removal, ultimately setting aside the impugned order and allowing the appeal with consequential reliefs.

In conclusion, the Tribunal found the disallowance of credit unjustified, considering the sale on F.O.R. basis and the buyer's premises as the place of removal. The decision was based on relevant case laws and the specific circumstances of the case, leading to the allowance of the appeal and setting aside of the impugned order.