2016 (12) TMI 1225 - AT - Central Excise

Tribunal rules against Revenue on CENVAT Credit eligibility for transportation services

The Tribunal allowed the appeal filed by the Revenue regarding the eligibility of CENVAT Credit on transportation services. It held that the conditions ... CENVAT credit on outward transportation - seller bears risk of loss or damage during transit - FOR destination basis - CBEC master circular No. 97/8/2007-ST dated 23/08/2007 - computation of limitation period from date of receipt of order-in-appealComputation of limitation period from date of receipt of order-in-appeal - Limitation for filing the present appeal is to be computed from the date of receipt of the Order-in-Appeal passed by the first appellate authority. - HELD THAT: - The Tribunal examined the preliminary objection that limitation should be counted from the date of the first appellate authority's order rather than its receipt, relying on the Apex Court decision cited by the respondent. The Tribunal distinguished that authority as dealing with suo motu review powers under Section 35E(3) and found it inapposite to appeals under the Central Excise appellate provisions. Consequently, for the present appeal the date relevant for computing limitation is the date of receipt of the Order-in-Appeal passed by the first appellate authority. [Paras 4]Preliminary objection on limitation rejected; limitation to be computed from date of receipt of the Order-in-Appeal.CENVAT credit on outward transportation - CBEC master circular No. 97/8/2007-ST dated 23/08/2007 - seller bears risk of loss or damage during transit - FOR destination basis - CENVAT credit on transportation services from factory to customers' delivery point is not admissible on the facts because the seller does not bear the risk of loss or damage during transit and the contract is not on FOR destination basis. - HELD THAT: - The Tribunal applied the condition in paragraph 8.2 of CBEC Master Circular No. 97/8/2007-ST (23/08/2007), as upheld by the Jurisdictional High Court, which requires that the seller bear the risk of loss or damage in transit to avail CENVAT credit for transportation beyond the factory. The adjudicating authority's findings in the Order-in-Original (30/10/2008) show that, under the contract, the appellant is not responsible for damage during transit or unloading. On this factual matrix the prescribed conditions of the Circular are not satisfied and the contract cannot be treated as FOR destination. Therefore the first appellate authority's contrary conclusion was set aside and the original order restored. [Paras 5]Revenue appeal allowed; CENVAT credit on outward transportation denied and Order-in-Original restored.Final Conclusion: The Tribunal rejected the limitation objection, computed limitation from receipt of the appellate order, and allowed the Revenue's appeal on merits, holding that CENVAT credit for transportation to customers is not admissible because the seller does not bear transit risk and the contract is not FOR destination; the adjudicating authority's order is restored. Issues:1. Eligibility of CENVAT Credit on transportation services.2. Calculation of period of limitation for filing appeal.Eligibility of CENVAT Credit on transportation services:The appeal was filed by the Revenue against an Order-in-Appeal passed by the Commissioner (Appeals), Patna. The Revenue contended that the appellant had taken credit on outward transportation from the place of removal, and the CBEC Circular No. 137/3/2006-CX was not applicable, as held by the first appellate authority. The Revenue argued that as per the language of the contract, damages during transportation would not be the responsibility of the appellant. Referring to CBEC master circular No. 97/8/2007-ST, it was stated that if conditions are not fulfilled, CENVAT credit is not admissible. The Revenue relied on a case law from the Calcutta High Court to support their argument. On the other hand, the Respondent argued that the appeal was time-barred, citing the Apex Court decision in the case of CCE Vs. M.M. Rubber Co. The Tribunal observed that the issue was whether the appellant would be eligible for CENVAT Credit on transportation services to customers. The Tribunal rejected the Respondent's preliminary objection regarding the period of limitation, stating that it should be calculated from the date of receipt of the Order-in-Appeal passed by the first appellate authority.Calculation of period of limitation for filing appeal:The Tribunal noted that the case law cited by the Respondent pertained to suo motto review orders passed by Departmental officers under Section 35E (3) of the Central Excise Act, 1944, which was not applicable in the present case. The Tribunal clarified that the relevant date for computing the available period should be from the date of receipt of the Order-in-Appeal passed by the first appellate authority. Regarding the admissibility of CENVAT Credit, the Tribunal referred to a judgment of the Jurisdictional Kolkata High Court, which upheld the authenticity of CBEC Circular No. 97/8/2007-ST. It was observed that the conditions for availing such credit included the seller bearing the risk of loss or damage during transit, which was not the case as per the contract in question. Therefore, the Tribunal held that the conditions prescribed by CBEC for availing CENVAT credit on transportation services were not satisfied, and the appeal filed by the Revenue was allowed, with the Order-in-Original passed by the adjudicating authority being restored.