Cenvat Credit on Outward Transportation of Goods

[Guest]

Dear Experts,

Pls. Resolve the Issue that whether cenvat credit of Service tax paid under RCM on GTA Services availed by a manufacturer on Outward transportation of finished goods from the factory to buyers premises during the F.Y. 2014-15 shall be admissible.

Even though the Place of Removal has been clearly defined vide notification No.21/2014, but whether the CBEC Circular no. 988/12/2014-CX hold relevance as it states that- 'the Place where sale has taken place or when the property in goods passes from the seller to the Buyer is the relevant consideration to determine the Place of Removal ', further it lays stress on the Sales of Goods Act, 1930 wherein the factors specified in the given circulars are satisfied.

Kindly let me know the relevance of circular for the F.Y. 2014-15 and onwards and other judicial pronouncements.

Regards,

CA Abhishek Ghai

Rajiv Mehrotra & Associates

Kanpur

[Guest]

Dear experts,

waiting for ur response!!! Pls. Share ur views

Thanks....

[KASTURI SETHI]

Dear Sh.Abhishek Ghai Ji,

The Board has a taken a 'U' turn regarding determination of 'place of removal' by issuance of this circular dated 20.10.14 and further amended vide Circular No. 999/6/2015-CX, dated 28-2-2015. Prior to this circular, place of removal was being determined on the basis of transfer of ownership of the goods in view of the elements of freight & insurance. Who bore the risk in transit ? In whose name transit insurance ? Who bore the freight and up to which place ? These were the determinant factors.Thousands of demands of Central Excise duty were raised by including the elements of freight and insurance (into assessable value) incurred up to the buyer's doorstep or depot treating the same as place of removal. These demands have been raised continuously for so many years. The factor of payment of sale tax was never in picture. Now on a fine morning, suddenly, the Board issued circulars determining the place of removal in pursuance Sale of Goods Act, 1930.

This change of stand can be termed as clarification by the Board and clarification is always retrospective. Judgements can be traced out in this aspect. Hence input service should be admissible for the year 2014-15 depending upon the facts of each case. There are so many other factors to prove/determine the place of removal on the basis Sale of Goods Act, 1930. Board's circulars are binding upon the department.

In addition to the Board's Circulars, the Supreme Court has settled this issue in its judgements pronounced in the year 2015. One of the major factors in these judgements is determination of place of removal on the basis of Sale of Goods Act,1930 which supports the latest 'U Turn' view of the Board. The decision of Supreme Court is law of the land.

Board has taken the changed view prior to the judgements pronounced in 2015 on the basis of earlier judgements of the Apex Court.

Thus there is not an iota of doubt that clarification of the Board is retrospective. This is my view.

AI Summary

Place of removal under the Sale of Goods Act determines admissibility of cenvat credit on outward transportation under reverse charge. Admissibility of cenvat credit on service tax under reverse charge for outward transportation hinges on place of removal. The Board's circulars reframe place of removal under the Sale of Goods Act-focusing on where property in goods passes rather than freight, insurance or risk tests-and are binding. The circulars are treated as retrospective clarifications and, together with supporting judicial precedents, require case specific factual assessment to determine whether cenvat credit can be claimed.