2022 (1) TMI 130 - AT - Central Excise

CENVAT Credit - input services - Goods Transport Agency (GTA) services - outward transportation of its final products from the factory to its buyer s premises - place of removal - FOR destination basis - HELD THAT - The appellant manufacturer has undertaken sale of H.A. High Availability bricks/F.C. Fire Clay bricks on FOR destination basis and the transportation cost was included in the sale price on which central excise duty has been discharged. The Adjudicating Authority has denied the cenvat credit taken by the appellant on the outward transportation from the factory to the dealer s premises. The place of removal is the premises of the buyer not the factory gate of the seller as the finished goods are cleared by the appellant on FOR destination basis - the appellant is entitled to cenvat credit on the GTA services for outward transportation of the goods sold on FOR destination basis - Appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of cenvat credit on outward transportation services

Analysis:
The appellant, engaged in the manufacture of H.A. bricks/Fire Clay bricks, avails cenvat credit on inputs, capital goods, and input services as per the Cenvat Credit Rules, 2004. The appellant sells products on FOR destination basis through a stockiest/agent and bears the risk of loss during transit. The transportation cost is included in the sale price, and central excise duty is duly discharged. The appellant avails GTA services for outward transportation and claims cenvat credit on service tax paid for such services.

A show cause notice was issued disallowing cenvat credit of a specific amount, leading to an Order-in-Original imposing recovery and penalty. The appellant appealed to the Commissioner (Appeals), who upheld the disallowance. The appellant then filed the current appeal challenging the order-in-appeal.

The Tribunal examined the submissions and noted that the place of removal for the goods is the buyer's premises, not the factory gate, as the goods are cleared on FOR destination basis. Considering the circumstances, the Tribunal held that the appellant is entitled to cenvat credit on GTA services for outward transportation of goods sold on FOR destination basis. Consequently, the appeal was allowed, the impugned order was set aside, and the appellant was granted consequential benefits as per the law.

This judgment clarifies the eligibility of cenvat credit on outward transportation services for goods sold on FOR destination basis, emphasizing the importance of the place of removal in determining credit entitlement. The decision provides guidance on interpreting the Cenvat Credit Rules in the context of transportation services related to sales transactions, ensuring compliance with central excise regulations.