2024 (11) TMI 919 - AT - Central Excise

CENVAT Credit - input services - service tax paid on GTA services which were utilized for movement of manufactured goods from the factory to the customer s premises for delivery of the goods at customer s place - HELD THAT - It is undisputed fact that the appellant is under contract for delivery of the goods on FOR destination at the customer s premises and the goods remained in the ownership of the appellant till the goods reached customer s premises and that the sale takes place at the customer s premises and the property or ownership of the goods is transferred to the customer at the customer s premises. It is settled law that cenvat credit of service tax paid on transportation of goods till the place of removal is admissible to a manufacturer. Now it is to be decided in the present case as to whether customer s premises is place of removal. It is noted that in the case of Roofit Industries Ltd. 2015 (4) TMI 857 - SUPREME COURT , Hon ble Supreme Court has held that the charges which are to be added for arriving at the value of the excisable goods will have to be put up to the stage of the transfer of the ownership of the goods from the manufacturer to the buyer. In para 13 of the said order, it was observed that in that case the sale of goods did not take place at the factory gate of the assessee, but at the place of the buyer on the delivery of the goods. In the present case the fact on record is that the ownership of the goods remained with the appellant till such time the goods were delivered at the buyer s premises. Therefore, in the present case the place of removal is buyer s premises. It is settled law that input service credit is admissible upto the place of removal. Therefore, in the present case the appellant was eligible for the said cenvat credit. The impugned order is set aside - appeal allowed.

Summary

Issues:
Admissibility of cenvat credit on service tax paid for GTA services utilized for transportation of goods from factory to customer's premises under FOR destination contract.

Analysis:
The appellant, a manufacturer of motor vehicle parts, availed cenvat credit of service tax paid on GTA services for moving goods from factory to customer's premises under FOR destination contracts from April 2012 to June 2017. Revenue contended the credit was inadmissible, leading to five show cause notices for recovery. The original authority denied the credit, stating service tax on outward transportation is not admissible, even under FOR destination contracts. The Commissioner (Appeals) upheld this decision. The appellant argued before the Tribunal that they retained custody and ownership of goods until delivery at customer's premises, citing a Larger Bench decision in the case of Ramco Cements Ltd. which allowed credit up to the place of removal. The appellant provided relevant judgments and circulars to support their claim.

The appellant's counsel argued that the goods' ownership remained with the manufacturer until delivery at the customer's premises under FOR destination contracts, making the GTA services input services eligible for cenvat credit. The appellant relied on the Larger Bench decision in Ramco Cements Ltd., Supreme Court decisions in Emco and Roofit Industries cases, and a Karnataka High Court decision, supported by a Board circular. The appellant contended that considering these rulings, they were entitled to the cenvat credit for GTA services utilized up to the customer's premises under FOR destination contracts.

The learned Authorized Representative (AR) relied on the Ramco Cements Ltd. decision, Supreme Court judgments in Ultra Tech Cement Ltd. and Ispat Industries Ltd., and a Board circular to argue that cenvat credit for service tax on transportation beyond the place of removal is not admissible. The AR contested the appellant's claim for credit on GTA services beyond the place of removal.

After reviewing the case records and submissions, the Tribunal noted that the appellant had a FOR destination contract where ownership of goods remained with them until delivery at the customer's premises, where the sale occurred. Referring to the Roofit Industries Ltd. case, the Tribunal established that the place of removal was the customer's premises in such scenarios. Citing the CBEC circular, the Tribunal confirmed that input service credit is admissible up to the place of removal. Consequently, the Tribunal allowed the appeal, setting aside the previous orders and ruling in favor of the appellant's eligibility for the cenvat credit on GTA services utilized up to the customer's premises under FOR destination contracts.