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of <h1>FOR destination sales and outward GTA transport CENVAT credit hinged on 'place of removal' u/s4(3)(c); denial remanded.</h1> CENVAT credit on outward transportation (GTA) turned on correct determination of the 'place of removal' under s. 4(3)(c) of the Central Excise Act, 1944 ... Recovery of CENVAT credit availed on outward transportation (GTA) services along with interest and penalty - demand confirmed holding that the place of removal was the factory gate and that GTA credit beyond such point was inadmissible - place of removal in the case of FOR destination sales. Determination of Place of Removal in FOR Contracts - HED THAT:- The determination of the “place of removal” under Section 4(3)(c) of the Central Excise Act, 1944 is a mixed question of fact and law and cannot be mechanically or presumptively fixed at the factory gate in all cases. The Larger Bench of this Tribunal in Ramco Cements Ltd. v. CCE, Puducherry, [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], has authoritatively held that the “place of removal” must be determined by examining the terms of sale, transfer of title, assumption of risk during transit, and inclusion of freight in the assessable value, applying the principles laid down by the Hon’ble Supreme Court in Emco Ltd., [2015 (8) TMI 200 - SUPREME COURT] and Roofit Industries Ltd., [2015 (4) TMI 857 - SUPREME COURT], the judgment of the Hon’ble Karnataka High Court in Bharat Fritz Werner Ltd., [2022 (7) TMI 352 - KARNATAKA HIGH COURT], and CBIC Circular No. 1065/4/2018-CX dated 08.06.2018. CBIC Circular No. 1065/4/2018-CX dated 08.06.2018 also mandates that adjudicating authorities must determine the “place of removal” based on factual parameters emerging from contracts and invoices, and not by applying a uniform presumption. In the present case, such an exercise has admittedly not been undertaken - It is considered appropriate to remand the matter for a limited factual verification to ascertain: i). Whether the clearances during the disputed period were effected on FOR destination basis; ii). Whether freight formed an integral part of the sale price; and iii). Whether ownership and risk in the goods were transferred only at the buyer’s premises. Upon such verification, the adjudicating authority shall determine the “place of removal” strictly in accordance with the law laid down by the Hon’ble Supreme Court, the Hon’ble Karnataka High Court in Bharat Fritz Werner Ltd., the Larger Bench of this Tribunal in Ramco Cements Ltd., and CBIC Circular dated 08.06.2018 - Accordingly, if it is found that the clearances were effected on FOR destination basis and that ownership and risk passed only at the buyer’s premises, such buyer’s premises shall constitute the “place of removal”. Eligibility of CENVAT Credit on GTA Services - HELD THAT:- For the period prior to 01.04.2008, the law stands conclusively settled by the Hon’ble Supreme Court in Vasavadatta Cements Ltd., [2018 (3) TMI 993 - SUPREME COURT] and Andhra Sugars Ltd., [2018 (2) TMI 285 - SUPREME COURT], holding that outward transportation up to the “place of removal” qualifies as “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004 - Even after the amendment to Rule 2(l) with effect from 01.04.2008, the Larger Bench in Ramco Cements Ltd. has held that where sales are effected on FOR destination basis and the buyer’s premises constitute the “place of removal”, GTA services used up to such place remain eligible for CENVAT credit - GTA services used for outward transportation up to the buyer’s premises shall be eligible for CENVAT credit subject to factual verification that such premises constitute the “place of removal”. The determination of the “place of removal” is a fact-based exercise and cannot be mechanically fixed at the factory gate - In cases where sales are established to be on FOR destination basis and ownership and risk pass only upon delivery, the buyer’s premises constitute the “place of removal” - GTA services used for outward transportation up to such place qualify as “input service” under Rule 2(l) of the CENVAT Credit Rules, 2004, both prior to and after 01.04.2008 - The impugned Order-in-Original, having been passed without undertaking the mandatory factual examination, is unsustainable in law. Accordingly, the impugned Order-in-Original is set aside, and the matter is remanded to the adjudicating authority solely for the limited purpose of examining the sale contracts, purchase orders, invoices, transport documents and allied records to determine whether the disputed clearances were effected on FOR destination basis and whether the buyer’s premises constitute the “place of removal” - Upon such verification, the adjudicating authority shall re-determine the admissibility of CENVAT credit on GTA services strictly in accordance with the law laid down by the Hon’ble Supreme Court, the Hon’ble Karnataka High Court in Bharat Fritz Werner Ltd., the Larger Bench of this Tribunal in Ramco Cements Ltd., and CBIC Circular dated 08.06.2018. Appeal allowed by way of remand. Issues: (i) What is the place of removal in the case of FOR destination sales? (ii) Whether GTA services used for outward transportation are eligible for CENVAT credit (a) prior to 01.04.2008 and (b) after 01.04.2008? (iii) Whether the issue stands concluded by binding precedent in the Appellant's own case?Issue (i): Determination of the place of removal in FOR contracts.Analysis: Relevant legal framework includes Section 4(3)(c) of the Central Excise Act, 1944 and the requirement to examine contractual terms governing transfer of title, assumption of risk, inclusion of freight in price and point of sale completion. The Larger Bench of the Tribunal and the Karnataka High Court have held that these factual parameters determine the place of removal; CBIC Circular No. 1065/4/2018-CX prescribes determination based on facts and contracts rather than a uniform presumption of factory gate. The impugned order made no factual inquiry into contracts, invoices or transport documents, necessitating a limited factual verification confined to whether sales were on FOR destination basis, whether freight formed part of sale price, and when ownership and risk passed.Conclusion: The place of removal is a fact-based determination; where sales are on FOR destination basis and ownership and risk pass only upon delivery at buyer's premises, the buyer's premises constitute the place of removal.Issue (ii): Eligibility of CENVAT credit on GTA services (a) prior to 01.04.2008 and (b) after 01.04.2008.Analysis: Rule 2(l) of the CENVAT Credit Rules, 2004 defines input service. For the period prior to 01.04.2008, the Hon'ble Supreme Court decisions establish that outward transportation up to the place of removal qualifies as input service. Post 01.04.2008, the amended Rule 2(l) does not preclude credit where, on factual determination, the place of removal is the buyer's premises in FOR contracts; the Larger Bench and subsequent decisions applied this principle to permit credit on GTA services up to the place of removal. Admissibility is therefore consequential on the factual finding of place of removal and is limited to GTA services up to that point.Conclusion: GTA services used for outward transportation up to the place of removal qualify as input service under Rule 2(l) of the CENVAT Credit Rules, 2004 both prior to and after 01.04.2008, subject to factual verification that the buyer's premises constitute the place of removal.Issue (iii): Whether the issue stands concluded by binding precedent in the appellant's own case.Analysis: The Larger Bench decision and subsequent orders in the appellant's own matters apply the same legal principle to identical facts; the jurisdictional authority had already followed that view for later periods. Consistency and judicial discipline support applying the same legal position to the present period where facts remain the same, subject to the required factual proof of FOR destination sales.Conclusion: The legal position is settled by binding precedent in the appellant's own case, but admissibility for the disputed period remains conditional on factual verification of FOR destination sales.Final Conclusion: The impugned adjudication, having been passed without the mandated factual examination of sale contracts and allied records to determine place of removal, is unsustainable and the matter is remanded for limited factual verification strictly confined to establishing whether the disputed clearances were on FOR destination basis and whether the buyer's premises constitute the place of removal; admissibility of CENVAT credit on GTA services is to be re-determined thereafter in accordance with law.Ratio Decidendi: The place of removal must be determined by factual examination of contractual terms (transfer of property, risk allocation, inclusion of freight); where, on that factual inquiry, sale is on FOR destination basis with transfer of ownership at buyer's premises, those premises are the place of removal and GTA services up to that point are admissible as input service under Rule 2(l) of the CENVAT Credit Rules, 2004.
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