Appellants denied Cenvat credit on transportation services per CBEC circular. Extended limitation period applied.

The Tribunal held that the appellants were not entitled to Cenvat credit on outward transportation services as per CBEC circular No. 97/8/07 dated 23.8.07, since freight charges were not included in the assessable value of goods sold on FOR basis. The Tribunal also found the extended period of limitation correctly invoked due to the department's discovery of the inadmissible credit during an audit, leading to the dismissal of the appeals.

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Issues:
- Denial of input Cenvat credit on outward transportation services
- Interpretation of CBEC circular No. 97/8/07 dated 23.8.07
- Applicability of Cenvat credit on freight charges in case of goods sold on FOR basis
- Invocation of extended period of limitation for issuing show cause notice

Analysis:

The appellants challenged impugned orders denying input Cenvat credit on outward transportation services based on show cause notices issued for different periods. The denial was rooted in the premise that although goods were sold on FOR basis, freight was shown separately in the invoices, leading to the conclusion that Cenvat credit was not permissible as per CBEC circular No. 97/8/07 dated 23.8.07. The adjudicating authority confirmed demands, imposed penalties, and interest, prompting the appeal.

The advocate for the appellants argued that since no duty was payable on freight charges as goods were sold on FOR basis, and Service tax on freight was paid, Cenvat credit on freight charges should be allowed as the goods were to be delivered at the buyers' door. Conversely, the learned AR contended that since freight charges were not part of the assessable value of goods, Cenvat credit for service tax on outward transportation services was not permissible, citing the CBEC circular.

The Tribunal considered the submissions in light of the Ambuja Cement Eastern case precedent where it was established that if goods sold on FOR basis did not include freight in the assessable value and did not comply with CBEC circular No. 97/8/07 dated 23.8.07, Cenvat credit on outward transportation services would not be allowed. Consequently, the Tribunal held that the appellants were not entitled to such credit as per the circular's compliance requirements.

Moreover, the advocate for the appellants raised the issue of the extended period of limitation invoked in the show cause notice dated 27.3.2012. The Tribunal noted that since there was no suppression on the appellants' part, the extended period was deemed inapplicable. However, it was highlighted that the department became aware of the inadmissible credit during an audit, indicating that the extended limitation period was correctly invoked. Consequently, the appeals were dismissed based on these findings.

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