2022 (4) TMI 365 - AT - Central Excise

CENVAT Credit - input services - outward transportation for removal of finished goods - FoR basis - applicability of Board Circular No. 1065/4/2018-CX dated 08.06.2018 - HELD THAT - It is admitted fact that the appellant had cleared their finished goods on FoR destination basis. Further, admittedly it is the appellant who has borne the freight from their factory premises and also borne the risk of transit. The appellant have right of disposal of the goods during transit, until the goods were delivered at the buyer premises. Thus, in the facts and circumstances, the property of goods got transferred to the buyer at the doorstep of the buyer upon delivery. Thus, in the facts and circumstances, the place of removal is the premises of the buyer. The appellant is entitled to cenvat credit on the outward transport under dispute - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant has rightly taken cenvat credit on outward transportation for removal of finished goods.

Analysis:
The appellant filed an appeal before the Commissioner (Appeals) claiming that cenvat credit on outward GTA service for clearance of finished goods on FoR basis is admissible as per Board Circular No. 1065/4/2018-CX dated 08.06.2018. The appellant argued that the place of removal is the buyer premises as they sold goods on FoR destination basis, retaining ownership and right of disposal until delivery at the buyer's doorstep. The Commissioner (Appeals) held that the place of removal is the factory gate of the appellant, dismissing the appeal. The appellant contended that they satisfied conditions under Section 4 of the Central Excise Act, demonstrating through a sample invoice that transit risk lies with the seller until delivery at the buyer's premises.

The Tribunal considered the appellant's claim that they cleared finished goods on FoR destination basis, bearing freight and transit risk until delivery at the buyer premises. The appellant had the right of disposal during transit, transferring property of goods to the buyer at the buyer's doorstep. The Tribunal held that the place of removal is the buyer's premises, entitling the appellant to cenvat credit on outward transport. The appeal was allowed, setting aside the impugned order and granting the appellant consequential benefits in accordance with the law.