2019 (7) TMI 1166 - AT - Central Excise

Tribunal allows Cenvat credit on transport services for tyre manufacturers

The Tribunal ruled in favor of the appellants, manufacturers of tyres and tubes, allowing them to avail Cenvat credit on service tax paid for Goods ... CENVAT Credit - input services - Goods Transport Agency Services used for outward transportation of finished goods from the factory to their customer’s premises - place of removal, factory gate or not - period from Apr.’12 to Mar.’16 - HELD THAT:- On perusal of various purchase orders, it is seen that the delivery terms is F.O.T. The learned counsel for appellants submitted that the “delivery is free on terms”. The terms are specified in the purchase order as well as in customers’ letters, which show that the appellant has to bear the freight charges, insurance etc., and deliver the goods to the customer’s premises. It is also reflected from the purchase orders that the appellant has paid excise duty on the ‘single price’ quoted in such orders. Invoices clearly show separate freight charges have been collected from the customers. The freight charges having been incurred by the appellants and also included in the assessable value, the place of removal can only be the buyer’s premises as laid down by Hon’ble Apex Court in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [2015 (4) TMI 857 - SUPREME COURT]. The credit availed on outward transportation of goods upto the buyer’s premises is eligible as decided by Division Bench of the Tribunal in the case of M/S ULTRATECH CEMENT LTD. VERSUS C.C.E. KUTCH (GANDHIDHAM) [2019 (2) TMI 1487 - CESTAT AHMEDABAD]. Credit allowed - appeal allowed - decided in favor of appellant. Issues:Whether appellants are eligible for Cenvat credit on service tax paid for Goods Transport Agency Services used for outward transportation of goods up to the buyer's premises.Analysis:The appellants, manufacturers of tyres and tubes, availed Cenvat credit on service tax paid on transportation services for delivering finished goods to customers. The department contended that the credit was not eligible as the place of removal was deemed to be the factory gate. Show-cause notices were issued, leading to Orders-in-Original confirming the demand, interest, and penalties. The Commissioner (Appeals) upheld the demand and interest but set aside the penalties. The appellants appealed to the Tribunal, arguing that the sale took place at the buyer's premises based on F.O.R. terms in purchase orders and the inclusion of freight charges in the assessable value.The appellant's counsel relied on legal precedents, including the decision in the case of Commissioner of Customs & Central Excise vs. M/s. Roofit Industries Ltd., to support their contention that the place of removal should be the buyer's premises. They also referenced a CBEC Circular and previous Tribunal judgments to strengthen their argument. The Revenue's representative supported the authorities' decision, citing a different legal precedent to assert that the place of removal was the factory gate.After hearing both sides, the Tribunal analyzed the purchase orders and delivery terms, concluding that the appellants were eligible for the credit on outward transportation of goods up to the buyer's premises. The Tribunal referenced previous judgments and extracted relevant paragraphs to support its decision, emphasizing that the inclusion of freight charges in the assessable value indicated the buyer's premises as the place of removal. The Tribunal found the disallowance of credit unjustified and set aside the impugned orders, allowing the appeals with consequential reliefs.