2017 (7) TMI 158 - AT - Central Excise

Appeal allowed, Cenvat Credit on outward transportation upheld, consequential benefits granted.

The Tribunal allowed the appeal, setting aside the impugned order and penalty concerning the disallowance of Cenvat Credit on outward transportation, ... CENVAT credit - outward transportation of Service Tax paid on their finished goods for sale on FOR destination basis - Held that: - The admitted facts on record are that the appellant was supplying goods, on FOR destination basis, had taken out insurance for transit and that the sales price included the freight element - the ruling of the larger Bench of this Tribunal in the case of ABB LTD. Versus COMMISSIONER OF C. EX. & ST., BANGALORE [2009 (5) TMI 48 - CESTAT, BANGALORE], squarely covers the issue in favor of the appellant, where it was held that services availed by a manufacturer for outward transportation of final products from the place of removal be treated as an input service in terms of Rule 2(1)(ii) of the CENVAT Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax paid on the value of such services - credit allowed - appeal allowed - decided in favor of appellant. Issues:Entitlement to Cenvat Credit on outward transportation of Service Tax paid on finished goods for sale on FOR destination basis.Analysis:The appellant's entitlement to Cenvat Credit on outward transportation of Service Tax paid on their finished goods for sale on FOR destination basis was the primary issue in this appeal. The appellant, engaged in the manufacture of Forgings and Crankshaft, faced disallowance of Cenvat Credit by the Revenue. The appellant contended that the issue was covered in their favor by a ruling in the case of Ambuja Cements Ltd versus CCE 2009-14-STR-3 and a larger Bench decision in ABB Ltd v/s CCE 2009-15-STR-23. The appellant argued that the transactions were duly recorded, and the sales were made on FOR destination basis with freight charges being an integral part of the goods' price. However, the Commissioner (Appeals) rejected the appeal, citing the absence of evidence regarding dispatch/supply of goods on FOR destination basis, insurance cover, and freight as an integral part of the value of excisable goods. The Commissioner also held that the larger period of limitation was applicable due to the appellant's failure to inform the Department about availing credit of Service Tax paid on outward freight.The appellant raised the grounds in the memorandum of appeal that the issue was covered in their favor by the larger Bench ruling in ABB Ltd v/s CCE. The Tribunal noted that the Commissioner (Appeals) did not specify which condition prescribed under the circular dated 23 August, 2007 was not fulfilled. The Tribunal found that the appellant had supplied goods on FOR destination basis, obtained insurance for transit, and included the freight element in the sales price, which were not found to be untrue. Consequently, the Tribunal held that the ruling of the larger Bench in ABB Ltd favored the appellant. The Tribunal also highlighted that the ruling of the larger Bench in ABB Ltd had been upheld by the Hon’ble Karnataka High Court. Therefore, the Tribunal allowed the appeal, setting aside the impugned order and penalty concerning the disallowance of Cenvat Credit on outward transportation, granting the appellant consequential benefits.