2026 (3) TMI 1523 - AT - Central Excise

Place of removal determines CENVAT credit eligibility for outward GTA freight to customers' premises.

CENVAT credit on GTA service used for outward transportation up to customers' premises is admissible where the facts show that the buyer's premises are ... Eligibility of CENVAT credit of service tax paid on GTA service used for outward transportation of goods up to the customer's premises - Place of removal - definition of input service under Rule 2(l) - FOR destination sales. Place of removal - HELD THAT:- The definition of ‘input service’ u/r 2(l) of CENVAT Credit Rules, 2004 provides that this clause covers services used directly or indirectly in or in relation to manufacture or provision of output service and it includes certain services mentioned therein which are used in relation to activities connected with manufacture but it excludes few specified services from the ambit of input service. For a service to qualify, it must fall within either the means or inclusive part and must not be hit by the exclusion clause. The Tribunal held that admissibility of credit on outward GTA service depends upon identification of the place of removal on the facts of each case. Following the Larger Bench decision in M/s Ramco Cements Ltd. [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], it was held that where the sale is on FOR destination basis, the customer's premises can constitute the place of removal. The objection that no documentary evidence of FOR destination sale had been produced was rejected, since that was not the Revenue's case before the lower authorities and the purchase orders and invoices on record showed FOR door delivery terms. As the purchase orders further provided that payment would be made only on receipt of goods in proper condition at the buyer's premises, the sale stood completed only upon such delivery and acceptance. On these facts, the customer's premises was the place of removal, and outward transportation up to that point qualified as input service under Rule 2(l) of the CENVAT Credit Rules, 2004. [Paras 5, 6, 7, 8, 9] The appellant was held entitled to CENVAT credit on the GTA service used for outward transportation up to the customers' premises, and the impugned order was set aside. Final Conclusion: The Tribunal held that, on the terms of sale evidenced by the purchase orders and invoices, delivery was completed at the buyers' premises and those premises constituted the place of removal. CENVAT credit on outward GTA service up to that point was therefore admissible, and the appeal was allowed. Issues: Whether CENVAT credit of service tax paid on GTA service used for outward transportation of goods up to the customer's premises was admissible, having regard to the place of removal under the valuation provisions and the definition of input service.Analysis: The admissibility of credit depended on whether the customer's premises constituted the place of removal on the facts of the sale. Section 4 of the Central Excise Act, 1944 links assessable value to the transaction value at the time and place of removal, and the definition of input service in Rule 2(l) of the CENVAT Credit Rules, 2004 covers outward transportation up to the place of removal. The purchase orders and invoices showed delivery on FOR door delivery terms, and payment was to be made only on receipt of goods in proper condition, indicating that the sale was completed upon delivery at the buyer's premises. In such a situation, the outward transportation was within the scope of input service.Conclusion: CENVAT credit on GTA service for transportation up to the customers' premises was admissible, the customers' premises being the place of removal on the facts of the case.