2024 (9) TMI 1589 - AT - Central Excise

CENVAT Credit - input service - whether post manufacture and clearance from the factory at Limda, Vadodara and enroute to the premises of the OEM, when the tyres are required to be stored in godowns during transit, whether service tax on godown rent as well as security personnel etc. is an eligible input service? - HELD THAT - From the terms and conditions of the supply and the observations of the Adjudicating Authority, it is absolutely clear that there is no dispute that the sale of goods gets completed only at the buyer s premises therefore, since the appellant is under obligation to deliver the goods at the customer s premises, the sale gets completed only after delivery of the goods. In this fact, all the expenses till the delivery of the goods deemed to have been included in the sale value of the excisable goods. Therefore, for the purpose of Cenvat credit, since the expenses upto the delivery of goods is includible in the excisable goods and excise duty was paid thereon, such services are eligible input service and credit is admissible, as held by this Tribunal in the case of M/S SANGHI INDUSTRIES LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) 2019 (2) TMI 1488 - CESTAT AHMEDABAD and ULTRATECH CEMENT LTD. VERSUS COMMISSIONER OF C. EX., BHAVNAGAR 2007 (3) TMI 738 - CESTAT AHMEDABAD . The impugned orders set aside - appeal allowed.

Summary

Issues:
Whether post manufacture and clearance from the factory, service tax on godown rent and security personnel during transit to OEM premises is an eligible input service.

Analysis:
The Appellant, engaged in manufacturing automotive tyres, cleared goods to OEMs. The issue is whether service tax on godown rent and security personnel during transit to OEM premises is an eligible input service. The Appellant argued that expenses up to delivery at the customer's place are part of the service up to the place of removal, citing various judgments in their favor. The Revenue contended that expenses beyond the factory gate are not eligible for credit, relying on different judgments.

The Tribunal examined the terms of the supply contract, which indicated that the sale of goods is on FOR basis, with the sale completing only at the buyer's premises. The contract specified delivery at the OEM's factory premises, with ownership transferring only upon delivery. The Adjudicating Authority also noted that the sale completes at the buyer's premises. The Tribunal concluded that since the sale completes only at the buyer's premises, expenses up to delivery are included in the excisable goods' sale value, making such services eligible as input services for credit.

The Tribunal distinguished the judgments cited by the Revenue, noting they were issued before subsequent developments in the law, particularly the decision of the Hon'ble Gujarat High Court in the Sanghi Industries and Ultratech Cement cases. Given the completion of sale at the buyer's premises, the Tribunal set aside the impugned orders and allowed the appeals.