Appellate Tribunal allows Cenvat credit on outward transportation for FOR destination sales

The Appellate Tribunal CESTAT CHANDIGARH ruled in favor of the appellants, allowing them to avail Cenvat credit on outward transportation for FOR destination sales. The Tribunal held that the place of removal should be considered the buyer's location if goods were delivered as per purchase orders, entitling the seller to claim the credit. The Tribunal emphasized the importance of following higher forum decisions and noted that the appellants, as consignees until delivery at the buyer's factory gate, were eligible for the credit. The impugned orders denying the credit were set aside, and the appeals were allowed with consequential relief.

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Issues:
- Denial of Cenvat credit on outward transportation for FOR destination sales
- Interpretation of place of removable as per Cenvat credit Rules, 2004
- Applicability of CBEC circular on availing Cenvat credit on outward transportation services

Analysis:

The judgment by the Appellate Tribunal CESTAT CHANDIGARH dealt with the issue of denial of Cenvat credit on outward transportation for FOR destination sales. The Revenue contended that as per Rule 2(qa) of Cenvat credit Rules, 2004, the place of removable is considered to be the factory gate, thereby restricting the availability of Cenvat credit beyond that point. The Tribunal examined the facts where the appellants bore transportation costs till the goods reached the factory gate of the buyer. The Revenue relied on previous decisions to deny Cenvat credit. However, the appellants argued that they were entitled to the credit based on a previous order by the Tribunal and a CBEC circular. The Tribunal noted that the Ld. Commissioner (Appeal) did not follow the Tribunal's order in a similar case, emphasizing the importance of following higher forum decisions. The Tribunal reiterated that if the goods were delivered to the buyer's place as per purchase orders, the place of removal would be the buyer's location, entitling the seller to avail Cenvat credit on outward transportation charges. The Tribunal emphasized that ownership of goods until delivery to the buyer is crucial in determining eligibility for Cenvat credit.

The Tribunal referenced the Notification No. 1065/04/2018-cx dated 08.06.2018 to support the appellants' claim for Cenvat credit on outward transportation services. It concluded that the appellants, being the consignees of the goods until delivery at the factory gate of the buyer, were entitled to avail the Cenvat credit. Therefore, the impugned orders denying the credit were set aside, and the appeals were allowed with consequential relief, if any. The judgment highlighted the significance of respecting Tribunal decisions and following higher forum orders when not contested, ensuring consistency and adherence to legal precedents in such matters.

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