Manufacturer entitled to CENVAT credit for service tax on GTA services for transporting goods to customer premises

The CESTAT Mumbai held that a manufacturer was entitled to CENVAT credit for service tax paid on GTA services used for transporting manufactured goods to customer premises. The tribunal determined that since goods remained in the appellant's ownership until delivery at customer premises under FOR destination contract, the customer premises constituted the place of removal. Relying on Roofit Industries Ltd. SC precedent, the tribunal ruled that input service credit is admissible up to the place of removal, making the appellant eligible for the claimed credit. The impugned order was set aside and appeal allowed.

---

---

Issues:
Admissibility of cenvat credit on service tax paid for GTA services utilized for transportation of goods from factory to customer's premises under FOR destination contract.

Analysis:
The appellant, a manufacturer of motor vehicle parts, availed cenvat credit of service tax paid on GTA services for moving goods from factory to customer's premises under FOR destination contracts from April 2012 to June 2017. Revenue contended the credit was inadmissible, leading to five show cause notices for recovery. The original authority denied the credit, stating service tax on outward transportation is not admissible, even under FOR destination contracts. The Commissioner (Appeals) upheld this decision. The appellant argued before the Tribunal that they retained custody and ownership of goods until delivery at customer's premises, citing a Larger Bench decision in the case of Ramco Cements Ltd. which allowed credit up to the place of removal. The appellant provided relevant judgments and circulars to support their claim.

The appellant's counsel argued that the goods' ownership remained with the manufacturer until delivery at the customer's premises under FOR destination contracts, making the GTA services input services eligible for cenvat credit. The appellant relied on the Larger Bench decision in Ramco Cements Ltd., Supreme Court decisions in Emco and Roofit Industries cases, and a Karnataka High Court decision, supported by a Board circular. The appellant contended that considering these rulings, they were entitled to the cenvat credit for GTA services utilized up to the customer's premises under FOR destination contracts.

The learned Authorized Representative (AR) relied on the Ramco Cements Ltd. decision, Supreme Court judgments in Ultra Tech Cement Ltd. and Ispat Industries Ltd., and a Board circular to argue that cenvat credit for service tax on transportation beyond the place of removal is not admissible. The AR contested the appellant's claim for credit on GTA services beyond the place of removal.

After reviewing the case records and submissions, the Tribunal noted that the appellant had a FOR destination contract where ownership of goods remained with them until delivery at the customer's premises, where the sale occurred. Referring to the Roofit Industries Ltd. case, the Tribunal established that the place of removal was the customer's premises in such scenarios. Citing the CBEC circular, the Tribunal confirmed that input service credit is admissible up to the place of removal. Consequently, the Tribunal allowed the appeal, setting aside the previous orders and ruling in favor of the appellant's eligibility for the cenvat credit on GTA services utilized up to the customer's premises under FOR destination contracts.

---