2024 (12) TMI 149 - AT - Central Excise

CENVAT credit allowed on outward GTA services when transportation costs included in assessable value

Saurashtra Cement Limited Versus Commissioner of C.E. & S.T. -Bhavnagar

CESTAT Ahmedabad allowed the appeal regarding CENVAT credit on outward GTA services. The appellant transported cement from factory to buyer premises with ... CENVAT Credit - outward GTA service used in connection with clearance of excisable goods namely cement from their factory premises to buyer premises, in the fact that the cost of transportation was included in the assessable value on which central excise duty was discharged - HELD THAT:- The fact is not under dispute that the appellant have undertaken to deliver the goods at the customer’s premises. The freight charges of GTA on which cenvat credit was taken is included in the assessable value of the excisable goods. This is evident from the excise invoice raised by the appellant. It is observed that the freight charges was not separately collected by the appellant, therefore, the same is deemed to be included in the assessable value on which the excise duty was paid. In this identical fact the issue in hand is covered by this Tribunal’s judgment in the case of Ultratech Cement Ltd [2019 (2) TMI 1487 - CESTAT AHMEDABAD] which was upheld by the Hon’ble Gujarat High Court in [2020 (3) TMI 1206 - GUJARAT HIGH COURT]. This issue was further considered by the Hon’ble High Court of Kerala in Central Excise Appeal No.17 of 2019 in the case of Transformers and Electricals Kerala Ltd vs. Commissioner of Central Tax and Central Excise Kochi/ Bangalore [2024 (10) TMI 623 - KERALA HIGH COURT], it was held that 'permitting the appellant to avail input tax credit in such circumstances would militate against the very Scheme of CENVAT credit, which is designed to avoid the cascading effect of tax and an ultimate burden on a consumer.' The issue involved in the present case is no longer res-integra and accordingly the appellant are entitled for cenvat credit on outward GTA in the facts of the present case. Hence, the impugned orders are set aside - Appeal allowed. Issues Involved:1. Entitlement to Cenvat credit on outward Goods Transport Agency (GTA) service for transportation of excisable goods.2. Inclusion of transportation cost in the assessable value for Central Excise duty.3. Applicability of legal precedents and circulars on the issue.4. Limitation and time bar concerning the demand for Cenvat credit.Issue-wise Detailed Analysis:1. Entitlement to Cenvat Credit on Outward GTA Service:The primary issue revolves around whether the appellant is entitled to Cenvat credit for the service tax paid on outward GTA services used for transporting excisable goods, specifically cement, from their factory to the buyer's premises. The appellant argued that since the transportation cost was included in the assessable value on which excise duty was discharged, they should be eligible for the credit. The Tribunal found that the freight charges were included in the assessable value as evidenced by the excise invoices, and thus, the appellant is entitled to Cenvat credit. This conclusion aligns with previous judgments, notably in the case of Ultratech Cement Ltd, which was upheld by the Gujarat High Court.2. Inclusion of Transportation Cost in Assessable Value:The Tribunal examined whether the transportation cost was included in the assessable value for the purpose of excise duty. It was observed that the freight charges were not separately collected, implying their inclusion in the assessable value. This inclusion is crucial because it determines the eligibility for Cenvat credit on outward transportation. The Tribunal referenced the Supreme Court's principles in cases like CCE vs. Ispat Industries Ltd, which clarified that the 'place of removal' is determined by the point of sale and that the transportation cost should be part of the assessable value if the sale is completed at the buyer's premises.3. Applicability of Legal Precedents and Circulars:The Tribunal considered various precedents and circulars, including the CBEC Circular No. 1065/4/2018 CX, which clarified the determination of the 'place of removal.' The Tribunal noted that in cases where goods are sold on a FOR (Free on Road) basis, the ownership and risk remain with the seller until delivery at the buyer's doorstep, making the transportation cost eligible for Cenvat credit. The Tribunal also emphasized that beneficial circulars cannot be withdrawn retrospectively, thus supporting the appellant's claim for credit during the material period.4. Limitation and Time Bar:The issue of limitation was addressed, with the Tribunal noting that the matter of outward GTA credit had been under litigation and subject to various clarifications over time. Given the lack of clarity and ongoing legal debates, the Tribunal found no malafide intention on the appellant's part, rendering any demand for an extended period unsustainable due to time bar.Conclusion:In light of the above analyses and the judgments cited, the Tribunal concluded that the appellant is entitled to Cenvat credit on outward GTA services. The inclusion of transportation costs in the assessable value was deemed appropriate, and the appellant's actions were consistent with legal precedents and circulars. Consequently, the impugned orders were set aside, and the appeals were allowed with consequential reliefs.