2018 (9) TMI 901 - AT - Central Excise

Tribunal denies CENVAT Credit on freight charges post-01.04.2008, citing legal precedents. Upholds disallowance decision.

The Tribunal affirmed the disallowance of CENVAT Credit on freight charges for outward transportation, citing legal precedents and interpreting relevant ... CENVAT credit - input services - freight charges for outward transportation of goods up to the customer’s premises - Held that:- The said issue as to whether the appellant is eligible for credit when the outward transportation is on F.O.R. basis up to the buyer’s premises, has been settled by the decision of the Hon’ble Apex Court in the case of M/s. Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent. In the present case, the period involved being after after 01.04.2008, the credit is not eligible - appeal dismissed - decided against appellant. Issues:1. Eligibility of CENVAT Credit on freight charges for outward transportation.2. Interpretation of relevant legal provisions and precedents.3. Applicability of Board Circular No. 97/8/2007.4. Admissibility of credit based on the nature of transportation.Issue 1: Eligibility of CENVAT Credit on freight charges for outward transportationThe appellant, engaged in manufacturing various products, availed CENVAT Credit on service tax paid for outward transportation of goods to the customer's premises. The Department contended the credit was not eligible, leading to a Show Cause Notice proposing disallowance, recovery with interest, and penalties. The Original Authority allowed credit on sales commission but disallowed it on freight outward charges, imposing a penalty of Rs. 2,000. The appellant challenged this decision before the Tribunal.Issue 2: Interpretation of relevant legal provisions and precedentsDespite the appellant's absence, the Tribunal considered the submissions of the Ld. AR and reviewed the records. The Ld. AR cited a precedent, C.C.E. & S.T. Vs. M/s. Ultra Tech Cement Ltd., to argue that credit on freight charges for outward transportation was not admissible. The Tribunal analyzed the appellant's argument that the transportation costs were part of the assessable value of goods as per a Board Circular, but concluded that based on the Supreme Court decision in the Ultra Tech Cement case, the credit was not eligible post-01.04.2008.Issue 3: Applicability of Board Circular No. 97/8/2007The appellant contended that the transportation costs were included in the assessable value of goods as per Board Circular No. 97/8/2007. However, the Tribunal relied on the Ultra Tech Cement case to determine the eligibility of credit, disregarding the Circular and holding that the credit was not admissible.Issue 4: Admissibility of credit based on the nature of transportationThe appellant argued that the transportation costs were incurred for executing work contracts involving the supply and application of materials, making them eligible for credit. However, the Tribunal, following the Ultra Tech Cement case precedent, held that credit on outward transportation charges up to the buyer's premises was not eligible. Consequently, the Tribunal dismissed the appeal, upholding the decision of the Original Authority.In conclusion, the Tribunal affirmed the disallowance of CENVAT Credit on freight charges for outward transportation, relying on legal precedents and interpreting relevant provisions to determine the ineligibility of the credit post-01.04.2008, despite the appellant's arguments based on Board Circular No. 97/8/2007.