2020 (6) TMI 354 - AT - Central Excise

CENVAT credit denied for outward transportation of goods in FOR destination sale

The Appellate Tribunal CESTAT, Hyderabad held that no CENVAT credit was admissible for outward transportation of goods to the buyer's premises when the ... CENVAT Credit - outward transportation of goods - Cement sold by the assessee to their customers on FOR destination basis - place of removal - HELD THAT:- This issue is no longer Res integra. It has been settled by the Hon’ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT] and the issues were identical. The Hon’ble Apex Court has laid down that where the goods are sold on FOR destination basis i.e., where the ownership of the goods gets transferred only at the buyer’s premises also no CENVAT credit is admissible for transportation of goods to the buyer’s premises. Credit cannot be allowed - appeal dismissed - decided against appellant. Issues:Interpretation of CENVAT credit rules for outward transportation on FOR destination basis.Analysis:The appeal before the Appellate Tribunal CESTAT, Hyderabad involved a dispute regarding the admissibility of CENVAT credit on outward transportation of goods from the appellant's premises to the buyer's premises. The central issue was whether the appellant could claim CENVAT credit on such transportation when goods were sold on a FOR destination basis. The appellant argued that the 'place of removal' shifted to the buyer's premises upon sale, entitling them to the credit. In contrast, the Revenue contended that the buyer's premises could not be considered the place of removal based on a previous Supreme Court ruling in the case of Ispat Industries.The Tribunal referred to a similar case decided by the Supreme Court in CCE and ST Vs Ultra Tech Cement, where it was held that no CENVAT credit was admissible for transportation of goods to the buyer's premises. The appellant, a cement manufacturer, relied on the CENVAT Credit Rules, 2004, which define input services and underwent an amendment in 2008. The rules allowed credit on outward transportation of goods until 2008, after which it was limited to transport up to the place of removal. The definition of 'place of removal' was crucial, as it determined the extent of admissible credit.The Tribunal noted that the issue had been settled by the Supreme Court in the Ultra Tech Cement case, where the denial of CENVAT credit on outward transportation was upheld. The Court rejected the arguments based on ownership, risk-bearing, and freight charges integral to the price of goods. The Tribunal emphasized that the previous approach taken by lower courts was untenable, and the CENVAT credit on transportation services was not admissible. A review petition filed by the assessee was also dismissed by the Supreme Court, affirming the original judgment.In conclusion, the Tribunal, in line with the Supreme Court's decision, held that no CENVAT credit was admissible to the appellant for outward transportation of goods to the buyer's premises when the sale was on a FOR destination basis. The appeal was rejected, aligning with the legal precedent established by the Apex Court.This detailed analysis of the judgment showcases the legal intricacies surrounding the interpretation of CENVAT credit rules and the determination of the place of removal in cases of outward transportation on a FOR destination basis.