Cenvat credit on insurance charges paid during erection and commissioning of transformer at customer site.

[Rajat Chandak]

i am auditing in a manufacturing company of transformers,i am explaining my query below -

company has contract to supply transformers at substation of customer, where an agreement of insurance is undertaken by manufacturing company for transformers sent to site for the period upto erection and commissioning of that transformer.and thus transformer sold and sent to customer site for the same purpose, my question is whether manufacturer of transformer can avail cenvat credit of service tax paid along with insurance premium on insurance of transformer.

AI Summary

Place of removal determines Cenvat credit entitlement; insurance during transit not eligible when sale occurs at factory gate.
Cenvat credit for service tax on insurance paid during transit and erection hinges on the place of removal and when property in the goods passes to the buyer. Board Circular No. 988/12/2014-CX and earlier circulars state that payment of insurance or who bears the risk does not determine place of removal; if sale is at the factory gate, transit insurance incurred after removal is not an eligible input service for Cenvat credit. Tribunal decisions apply this principle where contracts show factory-gate sales.