2020 (7) TMI 319 - AT - Central Excise

Transportation Costs Excluded from CENVAT Credit Eligibility

NCL Industries Ltd. Versus Commissioner of Central Tax, Guntur – GST Commissionerate

The CESTAT Hyderabad held that no CENVAT credit is admissible to the appellant for outward transportation of goods to the buyer's premises, in line with ... CENVAT Credit - input services - outward transportation of goods from their premises to the buyers premises or otherwise - sale of goods on FOR (buyer’s premises) 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. In that case, the original adjudicating authority namely the Assistant Commissioner had denied the benefit of CENVAT credit on the outward transportation of the goods from the factory to the buyer’s premises when the sale was on FOR destination basis. The assessee challenged the order of the original authority and the Commissioner (Appeals), relying on the Board Circular dated 23.08.2007 has held that the appellant is entitled to the benefit of CENVAT credit on the outward transportation of goods up to the buyer’s premises. This order of the Commissioner (Appeals) was also upheld by the Hon’ble CESTAT, Bangalore and Hon’ble High Court of Karnataka. 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. No CENVAT credit is admissible to the appellant - Appeal dismissed - decided against appellant. Issues Involved:Interpretation of CENVAT credit rules regarding outward transportation of goods on FOR destination basis.Detailed Analysis:Issue 1: CENVAT Credit on Outward TransportationThe main issue in this case revolves around whether the appellant can claim CENVAT credit on the outward transportation of goods from their premises to the buyer's premises when selling goods on a FOR destination basis. The appellant argues that the 'place of removal' shifts to the buyer's premises, entitling them to the CENVAT credit. However, the Revenue contends that the buyer's premises cannot be considered the place of removal, as established in previous court decisions. The CESTAT Hyderabad refers to a similar case decided by the Apex Court, emphasizing that no CENVAT credit is admissible for the transport of goods to the buyer's premises.Issue 2: Interpretation of CENVAT Credit RulesThe appellant, a cement manufacturer, claims that outward transportation services qualify as input services under the CENVAT Credit Rules. They argue that denying CENVAT credit on outward transportation contradicts the scheme of CENVAT credit. The appellant challenges the restriction imposed by the definition of input service post-amendment in 2008, asserting that CENVAT credit should be allowed as the sale is on a FOR basis. However, the CESTAT Hyderabad notes that the issue has been conclusively settled by the Apex Court in a previous case involving Ultra Tech Cement, where it was held that no CENVAT credit is admissible for outward transportation of goods to the buyer's premises.Conclusion:Based on the precedents set by the Apex Court and the interpretation of the CENVAT Credit Rules, the CESTAT Hyderabad concludes that no CENVAT credit is admissible to the appellant for outward transportation of goods to the buyer's premises. The judgment aligns with the Apex Court's decision and dismisses the appeal accordingly, upholding the denial of CENVAT credit on transportation services.