2017 (2) TMI 434 - AT - Central Excise

Transportation Linked to Credit Availment Qualifies as Place of Removal: Remand for Thorough Verification

The Member (Judicial) found that the transportation related to the availed credit appeared connected to clearances of goods to the depot, qualifying as ... CENVAT credit - GTA services - denial on the ground that the outward transportation is not upto the place of removal and that in respect of the clearance of goods sold directly to the customers - reverse charge mechanism - Held that: - it prima facie appears that the transportation in respect of which the appellants have availed the cenvat credit is in connection with the clearances of goods to their depot. The depot is the place of removal as per the definition given in Section 4 therefore the credit is clearly admissible if the transportation is upto the depot - the documents submitted by the appellants not been properly looked into and due to which it could not be ascertained whether the credit is related to the outward transportation used for removal of goods to their depot. Therefore the matter needs to be reconsidered - appeal allowed by way of remand. Issues Involved:1. Availment of Cenvat Credit on service tax paid on GTA under reverse charge mechanism.2. Denial of credit by the department due to transportation not being upto the place of removal.3. Dispute regarding the admissibility of credit for clearances of goods to the depot.4. Evaluation of documents submitted by the appellant to ascertain the nature of transportation and eligibility for Cenvat credit.Issue 1: Availment of Cenvat Credit on service tax paid on GTA under reverse charge mechanism:The appellants availed Cenvat Credit on service tax paid on Goods Transport Agency (GTA) under the reverse charge mechanism. The department contested this claiming that the outward transportation did not extend up to the place of removal, leading to the denial of credit.Issue 2: Denial of credit due to transportation not being upto the place of removal:The department argued that the transportation did not reach the place of removal for goods sold directly to customs, which formed the basis for denying the Cenvat credit. The appellant, through their counsel, contended that the clearances of goods extended up to the depot, which qualifies as a place of removal under Rule 2(l) of the Cenvat Credit Rules.Issue 3: Dispute regarding admissibility of credit for clearances of goods to the depot:The Assistant Commissioner for the Revenue reiterated the findings of the impugned order, emphasizing the lack of clarity in the documents submitted regarding whether the transportation was indeed in connection with clearances made to the depot. Both lower authorities had denied the Cenvat credit on these grounds.Issue 4: Evaluation of documents to determine eligibility for Cenvat credit:Upon careful consideration of submissions, the Member (Judicial) found that the transportation related to the availed credit appeared to be connected to clearances of goods to the depot, which qualifies as the place of removal as per Section 4. However, it was noted that the lower authorities had not adequately examined the documents submitted by the appellants to ascertain the nature of transportation. Consequently, a remand was ordered for the original adjudicating authority to thoroughly verify all documents and statements. The adjudicating authority was directed to conduct a de novo adjudication within three months, allowing the appellant an opportunity for a personal hearing and document submission in support of their defense.This comprehensive analysis of the judgment addresses the issues involved in the case, highlighting the arguments presented by both sides and the reasoning behind the decision to remand the matter for further examination and clarification.