2019 (2) TMI 1487 - AT - Central Excise

Tribunal grants Cenvat credit on service tax for outward transportation, buyer's doorstep as 'place of removal'.

M/s Ultratech Cement Ltd. Versus C.C.E. Kutch (Gandhidham)

M/s Ultratech Cement Ltd. Versus C.C.E. Kutch (Gandhidham) - TMI Issues Involved:1. Denial of Cenvat credit on service tax paid on outward transportation.2. Determination of the 'place of removal' for the purpose of availing Cenvat credit.3. Applicability of beneficial Circulars retrospectively.4. Limitation and suppression of facts.Issue-wise Detailed Analysis:1. Denial of Cenvat Credit on Service Tax Paid on Outward Transportation:The appellant, engaged in the manufacture of cement, was denied Cenvat credit on service tax paid on outward transportation by the adjudicating authority. The authority held that credit on Goods Transport Agency (GTA) service is available only up to the 'place of removal' as per Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant argued that they cleared goods on a FOR (Free on Rail/Road) basis, bearing all expenses up to delivery, including freight and insurance, which were included in the invoice value. They contended that the credit should be available since the sale was completed at the buyer's doorstep.2. Determination of the 'Place of Removal':The appellant claimed that the 'place of removal' should be the buyer's doorstep or depot/stockist, as they bore the risk and freight charges until delivery. They relied on CBEC Circular No. 1065/4/2018-CX, which clarifies that the 'place of removal' is determined with reference to the 'point of sale.' The tribunal agreed, noting that the Chartered/Cost Accountant certified that the goods were sold on FOR basis and the appellant bore the freight and damages until delivery. The tribunal cited the Supreme Court's judgment in CCE & CU Vs. Roofit Industries Ltd., which held that freight paid on outward transportation qualifies as 'Input Service' when goods are cleared on FOR basis.3. Applicability of Beneficial Circulars Retrospectively:The appellant argued that they operated under the guidelines of Circulars dated 22.12.2014 and 23.08.2007, which were operative during the relevant period. They contended that the withdrawal of these Circulars in 2018 should not have retrospective effect. The tribunal agreed, citing the Supreme Court's judgment in Suchitra Vs. CCE, which held that beneficial Circulars should be applied retrospectively while oppressive Circulars apply prospectively.4. Limitation and Suppression of Facts:The appellant contended that the demand was hit by limitation as there was no suppression of facts. They argued that the issue of admissibility of Cenvat credit on outward GTA was a matter of grave litigation across various judicial forums. The tribunal agreed, noting that the issue was not free from doubt and had been subject to various litigations. Consequently, no malafide intention could be attributed to the appellant, and demands for the extended period were unsustainable on the grounds of time bar.Conclusion:The tribunal held that the appellants were eligible for the Cenvat credit of service tax paid on outward freight. The impugned order was set aside, and the appeal was allowed with consequential reliefs. The tribunal emphasized that beneficial Circulars should be applied retrospectively, and no malafide intention could be attributed to the appellant due to the ongoing litigation on the issue. The demand for the extended period was also found to be time-barred.