2011 (8) TMI 88 - AT - Service Tax

Appellants Win Cenvat Credit for GTA Services in Sales on 'FOR' Basis

The Tribunal allowed all three appeals, granting the appellants relief in availing cenvat credit of service tax paid on GTA services for outward ... Cenvat credit of service tax on GTA services for outward transportation - Interpretation of input service definition prior to amendment - Place of removal - Sale on FOR basis as determinative of place of removal - Board Circular No. 97/8/2007-ST dated 23.08.2007Cenvat credit of service tax on GTA services for outward transportation - Interpretation of input service definition prior to amendment - Admissibility of cenvat credit of service tax on GTA services for outward transportation for the period prior to 01.4.2008. - HELD THAT: - The Tribunal applied the decision of the Hon'ble High Court of Karnataka in ABB Limited to hold that, prior to the amendment of the definition of input service, credit of service tax paid on outward transportation is admissible. The Court accepted that the pre-amendment position permits such credit and concluded that the credit taken by the appellant for the period prior to 01.4.2008 must be allowed.Credit allowed for the period prior to 01.4.2008.Place of removal - Sale on FOR basis as determinative of place of removal - Board Circular No. 97/8/2007-ST dated 23.08.2007 - Admissibility of cenvat credit of service tax on GTA services for the period subsequent to 01.4.2008 up to 31.08.2009, having regard to whether goods were removed up to the place of sale. - HELD THAT: - The Tribunal identified that post-amendment credit is available only where inputs (transportation services) have been utilised up to the place of removal. It examined the documentary records produced by the appellant, including purchase orders showing prices on FOR basis, invoices inclusive of freight and insurance, and a chartered accountant's certificate. Applying Board Circular No. 97/8/2007-ST dated 23.08.2007, which recognises that where ownership, risk and freight arrangements show sale at the destination the place of removal is the buyer's premises, the Tribunal found that the sales were on FOR basis and that freight and insurance formed part of the price. On these facts the Tribunal concluded that the place of removal was the buyers' premises and therefore the service tax credit for outward transportation was admissible for the subsequent period.Credit allowed for the subsequent period up to 31.08.2009 on facts showing sale on FOR basis and compliance with the Board Circular.Final Conclusion: All three appeals allowed; cenvat credit of service tax on GTA outward transportation is permitted for the period prior to 01.4.2008 following ABB Limited, and on the subsequent period up to 31.08.2009 on the facts that sales were on FOR basis with freight and insurance included, in conformity with Board Circular No. 97/8/2007-ST. Issues:1. Availing cenvat credit of service tax paid on GTA services for outward transportation of goods.2. Determining the place of removal for availing cenvat credit.3. Interpretation of relevant Circular issued by the Board regarding the place of removal.Analysis:1. The appeals involved the issue of availing cenvat credit of service tax paid on GTA services for outward transportation of goods. The appellants initially did not take credit until a Tribunal decision prompted them to do so, leading to the issuance of show cause notices for different periods from 2007 to 2009.2. The Tribunal analyzed the issue of availing cenvat credit for the period prior to April 1, 2008, and subsequent periods. For the period before April 1, 2008, the Tribunal referred to a High Court decision stating that credit of service tax would be admissible up to the place of removal. The question for subsequent periods was whether the appellants utilized inputs for transportation up to the place of removal.3. The Tribunal considered the place of removal crucial for determining credit availability. Lower authorities had denied credit based on the belief that sales were made at the factory gate. However, the appellants argued that sales were on a 'FOR' basis, with freight and insurance included in the price. The Tribunal agreed with the appellants, citing a Circular stating that if the sale occurred at the destination point, credit of service tax paid on transportation would be admissible.4. After reviewing the submissions and documents, including purchase orders and the Circular, the Tribunal concluded that the sale was on a 'FOR' basis, with insurance and freight costs included in the assessable value. Consequently, the Tribunal allowed all three appeals, providing consequential relief to the appellants based on the interpretation of the Circular and the facts presented.This detailed analysis of the judgment highlights the issues involved, the legal interpretations made by the Tribunal, and the ultimate decision rendered in favor of the appellants based on the evidence and relevant legal provisions.