2015 (6) TMI 126 - AT - Service Tax

Factory gate deemed 'place of removal' for Cenvat credit denial on transportation services

The Tribunal upheld the denial of Cenvat credit for Service Tax paid on transportation services, ruling that the factory gate, not the depot of another ... Denial of CENVAT Credit - Whether the appellant would be eligible for Cenvat credit of Service Tax paid on the GTA service availed for transportation of the biscuits from their factory to the depot of M/s. Parle Biscuits - Held that:- In view of the Tribunal’s judgment in the case of Ultratech Cement Ltd. v. CCE, Chandigarh/Raipur (2014 (3) TMI 159 - CESTAT NEW DELHI), since in this case the assessable value of the goods was being determined not under Section 4 but under Section 4A of the Central Excise Act, 1944, the definition of “place of removal” as given in Section 4(3)(c) cannot be adopted for the purpose of Cenvat Credit Rules, 2004 and accordingly it is the factory gate which would be the place of removal. Moreover, even if the definition of “place of removal” as given in Section 4(3)(c) is treated as applicable to the cases where the duty on the finished goods is payable on the value determined under Section 4A, even then, the depot of M/s. Parle Biscuits cannot be treated as “place of removal” in respect of the goods manufactured by the appellant as the, “place of removal” defined in Section 4(3)(c) is the place of removal for the manufacturer of the goods and in case, the manufacturer after clearing the goods from the factory to his depots [clears] all the goods from those depots, it is those depots which would be the place of removal. However, when the manufacturer clears the goods to the depots of some other persons, those depots cannot be treated as “place of removal” for the manufacturer, unless the sales are on FOR destination basis. “Place of removal” in this case is factory gate of the appellant, and not the depot of M/s. Parle Biscuits. In view of this, we hold that the Cenvat credit of the service tax paid on the GTA services availed for transportation of goods from the factory of the appellant to the depot of M/s. Parle Biscuits has been correctly denied - Cenvat credit demand has been correctly upheld along with interest. - Decided against assessee. Issues:Eligibility for Cenvat credit of Service Tax paid on GTA service for transportation of goods from factory to depot.Detailed Analysis:1. The appellant, a biscuit manufacturer, was involved in a dispute regarding the eligibility for Cenvat credit of Service Tax paid on the GTA service for transporting goods to the depot of another company. The dispute covered the period from November 2009 to October 2011. The original Adjudicating Authority denied the credit, leading to an appeal by the appellant.2. The main contention was whether the appellant could claim Cenvat credit for the Service Tax paid on the transportation of goods to the depot of another company. The appellant argued that as per their contract, the depot of the other company should be considered the 'place of removal,' making them eligible for the credit. They also cited a Tribunal judgment supporting their claim.3. The Respondent, however, defended the denial of credit, referring to a different Tribunal judgment that stated the 'place of removal' should be considered the factory gate for goods cleared under specific rates or Section 4A of the Central Excise Act, 1944. They argued that the appellant did not meet the criteria for claiming the credit.4. The appellant further argued that the Tribunal's judgment cited by the Respondent was under appeal in a higher court and, therefore, should not be considered as a precedent. After considering both sides' arguments and examining the facts, the Tribunal concluded that the appellant was not eligible for the Cenvat credit.5. The Tribunal upheld the denial of Cenvat credit based on the definition of 'place of removal' under Section 4(3)(c) of the Central Excise Act, 1944. It determined that the factory gate, not the depot of the other company, should be considered the place of removal for the appellant's goods. Therefore, the demand for Cenvat credit was upheld, along with interest.6. In the final decision, the Tribunal dismissed the appeal, stating that the appellant was not entitled to the Cenvat credit for the Service Tax paid on the transportation services. The stay petition was also disposed of in light of the judgment.This detailed analysis provides a comprehensive overview of the legal judgment, focusing on the issues involved and the arguments presented by both parties before the Tribunal.