2023 (12) TMI 841 - AT - Central Excise

Disallowance of credit - goods transport agency service - other services related to storage and warehousing of goods after clearance from the factory of production - Penalty u/r 15 of CENVAT Credit Rules, 2004 - HELD THAT - It is found from the records that the adjudicating authority has examined the definition of excisable goods and place of removal in Central Excise Act, 1944. It is worth noting that place of removal is relevant only for the purpose of determination of transaction value in section 4 of Central Excise Act, 1944. Furthermore, place of removal is a concept which enables duty leviable on manufacture to be restricted to such value as is attributable to cost involved in production and clearance from the factory but which, nevertheless, includes such expenses when such sale occurs at a further point. There is no doubt that the goods removed by the appellant are subject to assessment at value declared as retail selling price subject to abatement. The amendment effected in rule 2(l) of CENVAT Credit Rules, 2004 enabling goods transport agency service to be availed of till place of removal and the consequential decision of the Hon ble High Court of Karnataka affirmed by the Hon ble Supreme Court in Commissioner of Central Excise, Belgaum v. Vasavadatta Cements Ltd 2018 (3) TMI 993 - SUPREME COURT did not exclude the possibility of such outward transport included in the assessable value from being eligible for availment of credit when circumstances so warranted. Evaluation of the submissions of the appellant on this score had not been undertaken by the original authority. Impugned order set aside - matter remanded to the original authority for a fresh decision keeping all issues open - appeal allowed by way of remand.

Summary

Issues Involved:
The issues involved in the judgment are the disallowance of credit of tax on 'goods transport agency service' and other services related to 'storage and warehousing' of goods, eligibility to avail CENVAT credit on services related to the movement of goods, interpretation of 'excisable goods' and 'place of removal', and the impact of the amendment in rule 2(l) of CENVAT Credit Rules, 2004 on availment of credit on outward transportation.

Disallowed Credit of Tax:
The appellant-company challenged the disallowance of credit of tax amounting to Rs. 9,77,32,045/- for the period from June 2010 to March 2015 and Rs. 2,42,65,251/- for the period from April 2015 to December 2015 on 'goods transport agency service' and other related services. Two individuals also appealed against penalties imposed on them under rule 15 of CENVAT Credit Rules, 2004.

Interpretation of 'Excisable Goods' and 'Place of Removal':
The appellant, engaged in the manufacture of various products, including refrigerators and televisions, availed credit on capital goods, inputs, and input services. The dispute centered around the eligibility to avail CENVAT credit on services related to the movement of goods from the factory to warehouses and the interpretation of 'place of removal' as per CENVAT Credit Rules, 2004.

Impact of Amendment in CENVAT Credit Rules:
The appellant argued that the duty liability was discharged at the factory gate, and all expenses on services till the goods reached the distributor's premises should be eligible for credit. They relied on circulars and previous tribunal decisions to support their claim. The respondent, however, cited an amendment disallowing credit on outward transportation and argued that the duty liability was discharged based on the 'retail selling price' beyond the 'place of removal' at the factory.

Judgment:
The Tribunal found that the original authority did not adequately evaluate the appellant's submissions on the eligibility of credit on outward transportation services. Therefore, the impugned order was set aside, and the matter was remanded to the original authority for a fresh decision while ensuring adherence to the principles of natural justice. The appellants were granted the opportunity to submit their claims before the original authority for reconsideration.