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 ... Cenvat credit of service tax - place of removal under Section 4(3)(c) and its applicability where duty is determined under Section 4A of the Central Excise Act, 1944 - GTA service (transportation of finished goods) - FOR destination salesCenvat credit of service tax - place of removal under Section 4(3)(c) - GTA service - Legitimacy of Cenvat credit for service tax paid on GTA services for transportation of biscuits from the manufacturer's factory to the depots of M/s. Parle Biscuits. - HELD THAT: - The Tribunal found that during the period in dispute the assessee's finished goods were chargeable to duty determined under Section 4A with reference to declared MRP. Applying the reasoning in Ultratech Cement Ltd. (Tri.), where assessable value was determined under Section 4A, the definition of place of removal in Section 4(3)(c) cannot be adopted for the purpose of the Cenvat Credit Rules, 2004; consequently the factory gate is the place of removal for Cenvat purposes. The Tribunal further held that even if the Section 4(3)(c) definition were treated as applicable, those depots can be treated as the manufacturer's place of removal only where the manufacturer clears goods to his own depots or where sales are on FOR destination basis and transfer of ownership occurs at the customer's premises. Here the goods were cleared to depots of another person (M/s. Parle Biscuits) and there was no FOR-destination sale; therefore those depots are not the manufacturer's place of removal. On these grounds the denial of Cenvat credit of service tax on the GTA service for transportation to Parle's depots was held to be correct and the related demand with interest was upheld.Cenvat credit of service tax paid on GTA services for transportation from the appellant's factory to the depots of M/s. Parle Biscuits is not admissible; place of removal is the factory gate and the denial of credit (with demand and interest) is upheld.Final Conclusion: Appeal dismissed; the Tribunal upheld the denial of Cenvat credit for service tax on transportation to the purchaser's depots for the period November, 2009 to October, 2011 and affirmed the demand with interest; stay petition disposed of. 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.