2023 (7) TMI 296 - AT - Central Excise

CENVAT Credit - input services - outward transportation charges - denial on the grounds that the sale contract and the invoices do have the words Door Delivery or FOR mentioned on the said documents - HELD THAT - From the Circular dated 08.06.2018, it is apparent that the essential criteria for allowing or disallowing the credit is if the Central Excise duty has been paid after including the freight element or otherwise. In case the Central Excise duty has been paid after including the freight element in the assessable value then the cenvat credit of the service tax paid on the freight element has to be allowed. Prima facie from the perusal of the sample documents produced by the appellant, it is noticed that the central excise duty has been paid after including the freight element. However, since only sample documents have been produced, it is necessary that a detailed verification may be conducted by the lower authorities to ascertain if Central Excise duty on all the documents have been paid after inclusion of the freight element in the assessable value. In case the Central Excise duty have been paid after inclusion of the freight element in the assessable value then the cenvat credit of GTA paid on said freight element cannot be denied in terms of the aforesaid Circular. The matter is remanded to the original adjudicating authority for fresh adjudication - Appeal allowed by way of remand.

Summary

Issues:
- Denial of cenvat credit of outward transportation charges.

Analysis:
The appeal was filed against the denial of cenvat credit of outward transportation charges. The appellant argued that the goods were sold after payment of duty on a value inclusive of outward freight, supported by invoices and a Circular from CBIC. The Authorized Representative contended that since the appellant was recovering freight from buyers, cenvat credit on freight cannot be allowed. The Tribunal noted that credit was denied based on the absence of specific terms like "Door Delivery" or "FOR" in the sale contract and invoices, with only sample documents available for review.

The Circular dated 08.06.2018 clarified the determination of the place of removal concerning cenvat credit rules. It emphasized that if Central Excise duty was paid after including the freight element in the assessable value, then cenvat credit of service tax on the freight element must be allowed. The Tribunal observed that a detailed verification is required to confirm if Central Excise duty on all documents was paid after including the freight element. Consequently, the impugned order was set aside, and the matter was remanded for fresh adjudication following the Circular issued by CBIC.

In conclusion, the judgment addressed the denial of cenvat credit on outward transportation charges, highlighting the importance of including the freight element in the assessable value for duty payment. The Circular provided guidance on determining the place of removal and its impact on cenvat credit eligibility, emphasizing the need for thorough verification in such cases. The Tribunal's decision to remand the matter for further adjudication aligned with the principles outlined in the Circular and aimed to ensure compliance with the relevant legal provisions.