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2022 (7) TMI 352 - HC - Central ExciseCENVAT Credit - input services - GTA services received for clearance of goods upto the place of removal - Rule 2(1) of the Cenvat Credit Rules 2004 - HELD THAT - The CESTAT in the case of Bharat Fritz Werner Ltd. Vs. C.C. C.E. S.T-Commissioner of Central Tax 2019 (1) TMI 56 - CESTAT BANGALORE has recorded in paragraph No.5 that as per the purchase orders appellant was required to supply the goods at the buyer s premises and the price of goods would include outward freight . Similarly in the case of MAPAL India Pvt. Ltd. CEA 71/2019 the CESTAT has recorded a similar finding. It is clear that as per Section 4(3)(c)(iii) of Central Excise Act 1944 the definition of Place of Removal means the premises from where the excisable goods are to be sold after their clearance form the Factory - The Input Service defined in Rule 2 (1) of CENVAT Credit Rules 2004 includes any service in relation to Outward Transportation up to the Place of Removal - The Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs New Delhi has issued Circular dated 08.06.2018 and clarified the definition Place of Removal . In para 5 of the Circular the Ministry has referred to the judgment in the case of CCE ST Vs. Ultra Tech Cement Ltd. 2018 (2) TMI 117 - SUPREME COURT and stated that in that case the Apex Court has held that CENVAT Credit on GTA Service from the place of removal to the buyer s premises is not admissible. In the instant cases the place of removal is buyer s premises - credit allowed - appeal allowed.
Issues:
1. Denial of cenvat credit for GTA services up to the place of removal as per Cenvat Credit Rules, 2004. Analysis: The High Court of Karnataka, comprising Hon'ble Mr. Justice P.S. Dinesh Kumar and Hon'ble Mr. Justice Anant Ramanath Hegde, addressed the issue of denial of cenvat credit for GTA services up to the place of removal as per the Cenvat Credit Rules, 2004. The appeals involved two separate cases, each concerning the denial of cenvat credit on Outward Goods Transport Agency (GTA) services used for transporting final products to the customer's place. The central question of law was whether the Tribunal was correct in denying the cenvat credit availed by the appellants for the period in dispute. In the first case (CEA 56/2019), a Public Limited Company manufacturing CNC Machines availed cenvat credit on GTA services but faced a demand for the credit amount along with penalties. The Tribunal upheld the demand but set aside the penalty. The appellant contended that the goods were delivered at the purchaser's site, making them eligible for cenvat credit on GTA services. The Court referred to previous judgments and the definition of 'Place of Removal' under the Central Excise Act, emphasizing the importance of the location where excisable goods are sold after clearance from the factory. In the second case (CEA 71/2019), a Private Limited Company engaged in manufacturing Special Boring Bars and Tools Holding Systems also availed cenvat credit on GTA services. Similarly, the Tribunal upheld the demand for credit but set aside the penalty. The appellant argued that the goods were delivered at the buyer's place, making them entitled to cenvat credit on GTA services. The Court reiterated the significance of the 'Place of Removal' and the definition of 'Input Service' under the Cenvat Credit Rules, 2004. The Court extensively analyzed previous judgments, including the Madras Cements Ltd. case, and a Circular issued by the Ministry of Finance clarifying the definition of 'Place of Removal.' The Court concluded that the Tribunal's view was unsustainable in law and allowed both appeals. The impugned orders demanding cenvat credit were set aside for both cases, emphasizing that the place of removal being the buyer's premises entitled the appellants to claim cenvat credit on GTA services. The Court's decision favored the assessee in both cases, holding that the Tribunal's denial of cenvat credit was not legally valid. In summary, the High Court of Karnataka ruled in favor of the appellants, allowing their appeals and setting aside the orders demanding cenvat credit for GTA services up to the place of removal, as per the Cenvat Credit Rules, 2004.
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